Mortgage Stress Survey 2023: 38% of Australians to Spend Less and Prioritise Mortgage
Savvy Media Release
As part of Savvy’s ongoing research into the economic and financial wellbeing of Australian families, our latest survey follows up 2022’s findings into mortgage stress.
- 21% of respondents say they haven’t missed repayments but are “under pressure”
- 38% say that they will spend less and prioritise their mortgage if rates continue to rise
- 13% say they will rely on savings to offset the rate rises
- 19% say they will try to increase their income, up from 14.5% in last year’s survey
A representative survey of 1,000 Australians on interest rate rises and its impact on mortgages has shown that 21% of Australian mortgage holders are “feeling the pressure” of rate hikes, though have not missed any mortgage repayments.
Australian families have been battling nine consecutive Reserve Bank of Australia (RBA) official cash rate rises since May 2022. This has brought the record low 0.1%p.a. rate to 3.35%p.a. Rate rises are a response to rampant inflation, which stands at 7.8%.
Despite this, 2% of respondents said that they have missed repayments on their mortgage, with 1% saying they have missed many repayments and are worried about losing their homes to the bank. Sadly, two respondents of the 1000 said they had already had the bank foreclose on their mortgage.
21% say they own their home outright; 22% say they are renting and are not as concerned about rate rises as much as their homeowner counterparts.
Combatting Interest Rate Rises: Then and Now
With mortgage repayments tipped to increase further, 38% of Australians have indicated they will spend less and prioritise the mortgage to make ends meet. (41% male, 34% female.) This is up from 27% from our polling in August 2022. 62% of 35–44-year-olds indicated this was their method of funding rate rise increases.
19% said they would try to increase their income, up 4.5% from last year (14.5%).
13% said they would rely on savings (2022: 14.4%); 5% said they would pay the difference with money in offset accounts (2022: 6.75%); and 10% said they would try and lock in a fixed interest rate (2022: 12%).
1.7% said they would try to downsize their home (2022: 2.5%).
Savvy spokesperson, Adrian Edlington, says that people are indeed feeling the pressure of consecutive rate rises, contributing to the broader cost of living crisis.
“People are willing to tighten belts and go without to prioritise the mortgage, which is exactly what the RBA wants to see but is a harsh reality for families doing it tough,” he says. “If rates continue to rise, scrimping and saving to fund the mortgage has an end point. With reports saying that consumer confidence has hit another near historic low last month, we can only hope that three percent cohort who are missing repayments doesn’t increase as time goes on.”
For full survey report with graphics, click here.
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Uhm ….. Is this a genuine AIMN article, or, an infomercial by a funds manager?
Genuine one, NEC. And it is not an infomercial and we do not receive payment.
We receive their reports on a fortnightly basis – which we generally don’t publish – but this was about something very topical, so we published.
It was my decision (MT) to add the “About Savvy” at the bottom.
Actually, I might remove it.
i am sorry for people with a mortgage but i am also happy they are struggling.
I have a lot of sympathy for them because i know how much they have invested emotionally and physically.
I am happy too because maybe in distress we as a nation can get over the insane prices of property. These people have “bought in” on the australian illusion.
I apologise if I’ve got this wrong, but doesn’t Australia have about 1 million empty houses? So, if residential dwellings and units 1) could only be owned by Australian residents with no more than 3 titles associated with any adult individual, none for children (except special conditions for children who lose their parents) and 2) Not allowed to be owned by trusts, businesses/corporations or foreign entities it would free up supply and reduce cost. The cost of housing in Australia is at an obscene level.
Yes Fred, that right, over 1 million empty houses servicing the purpose of land banking for the wealthy. Add in Air B&B short term rentals pushing out long term renters as ‘investors’ chase tax breaks and the picture gets clearer. The govt of the day could put restrictions on tax breaks for investors, eg. new build only, not offsetting losses against employment income etc. The reason that doesn’t happen is pollie-morons own lots of established investment properties and they offset losses against their ill-earned parliamentary salaries.
The whole problem of mortgage stress resulting from an inflated RE market is fabricated.
Govt could fix it all but the prospect of losing the advantages they legislatively baked into the system is a bridge too far.
Perhaps part of the real cause is bank greed. Borrowers should be able to get fixed interest loans for the term of their loans, especially as most residential owners usually hold property for about 7-8 years.
Then the above wonderful ideas contributed by others are additional benefits.
@AIMN: Thank you for the clarification.
No worries, NEC.
I did realise after your comment that the bio was perhaps the wrong idea.