Mortgage Stress Survey 2023: 38% of Australians to Spend Less and Prioritise Mortgage

The AIM Network

3 years ago

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.”