Aussie homeowners are paying almost 20% more in mortgage interest than they were a year ago, according to analysis from Money.com.au.
This equates to an additional $4.8 billion paid to banks in the past 12 months, based on data from the Reserve Bank (RBA).
In the September quarter, mortgage interest payments reached a record $30 billion, nearly matching the GDP of Jamaica.
Peter Drennan (pictured above left), research and data expert at Money.com.au, explained this increase stems from a combination of soaring property prices, high borrowing rates, and an influx of new borrowers.
“Homeowners are being hit with a perfect storm — interest rates at a 13-year high, skyrocketing property prices forcing buyers into larger mortgages, and more borrowers entering the market,” Drennan said.
Approximately 67% of scheduled mortgage repayments now go toward interest, marking the highest proportion in a decade. For investors, this figure is even steeper at 72%, Money.com.au reported.
On a $600,000 mortgage, monthly repayments average $3,702, with $2,464 allocated to interest.
The average variable interest rate for such loans increased from 6.00% to 6.27% over the past year, raising monthly repayments by about $105.
Despite rising costs, households are not just keeping up with their mortgage commitments — they are accelerating repayment efforts. Extra repayments rose by 24% compared to a year ago.
For example, on a $600,000 loan, Aussie homeowners are now making $877 in extra repayments monthly, up from $566 last year. This shift reflects an emphasis on reducing debt faster, despite high living costs.
Mansour Soltani (pictured above right), home loans expert at Money.com.au, attributed this to sacrifices made by households.
“Australians are cutting back on dining out, vacations, and everyday luxuries to prioritise debt reduction,” Soltani said. “Many are even selling underperforming assets or downsizing to pay off their primary residence sooner.”
In the September quarter, Australians made $10.6 billion in extra loan repayments, alongside $44.7 billion in scheduled payments. This represents a substantial rise from the $6.8 billion in extra repayments recorded during the same period last year.
While the financial strain of high interest rates remains challenging, these additional repayments indicate homeowners are actively tackling their mortgage debt, Money.com.au said.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
