New research by comparison website Mozo has revealed that a worrying three quarters of those with a mortgage do not have a repayment buffer.
What’s more, only around half of those who were not ahead of their home loan repayments were making capital and interest payments to make headway into their debt.
It was not surprising then, that when Mozo asked them if they were scared of rate hikes, a massive 90% of borrowers answered “yes.”
The findings came as the Reserve Bank of Australia raised the OCR by an additional 25 basis points to 3.85%, adding $92 to monthly repayments on a $600,000 mortgage. This meant that mortgage holders have forked out an extra $14,196 in repayments since rate increases began in May 2022, than they otherwise would have done.
RBA figures showed that even though the household savings rate has plummeted to a six-year low, the nation was still well ahead on savings and repayments, which was why the central bank remained confident that the banking sector wouldn’t come to any harm if rates rose.
But the reality of relentless interest rate hikes was a lot scarier for mortgage holders, said Peter Marshall (pictured above), Mozo’s banking expert.
“Our survey shows the human side of the numbers; there is a real divide between the haves and the have nots. And a massive majority are really scared right now,” Marshall said.
“It has never been more important to shop around for your mortgage and big household expenses. We are seeing real competition in the mortgage market right now, including cuts to fixed home loan rates.
“Doing some comparisons on mozo.com.au, and using our calculators, could really help your monthly expenses and give you some peace of mind.”
When mortgage holders were asked by Mozo if they are ahead on their repayments they said:
|
No, I’m behind on my repayments |
7% |
|
No, I’m just paying the interest only each month at the moment |
17% |
|
No, but I’m paying principal and interest each month on time |
52% |
|
Yes, I have funds in a redraw facility or offset account |
25% |
When asked by Mozo if they were fearful of rates increasing, borrowers said:
|
Yes, I am concerned about how much my mortgage repayments will increase |
46% |
|
Yes, I am concerned but I will save and plan for the increase in my repayments |
22% |
|
Yes, when my fixed period ends, I am going to struggle to pay my mortgage |
11% |
|
Yes, I will have to switch to interest-only repayments |
7% |
|
Yes, I will have to seek hardship from my lender if they increase more or sell |
3% |
|
No |
11% |
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