Under pressure: One in eight borrowers behind on payments

Australian mortgage holders are beginning to feel the bit of another interest rate rise with a new report showing some are falling behind on their repayments.

A snapshot study of borrowers has shown that seven per cent of mortgage holders have missed one home loan repayment in the past six months and more than six per cent have missed more than one repayment.

The finds from comparison site Finder surveyed 1054 respondents, 313 of which have a mortgage, revealing that one in eight have missed a mortgage.

Richard Whitten, home loans expert at Finder, said the level of mortgage stress in Australia was worrying.

“Nine consecutive rate hikes from the RBA means an Australian with the average loan size of around $600,000 will be paying roughly $1000 per month more compared to what they were paying in April last year,” he said.

Now is not the time to stick your head in the sand if you are caught behind.

“If you know you’re going to miss a payment, talk to your lender first. It’s better to negotiate some kind of hardship arrangement or a repayment holiday than to simply stop repaying the loan,” said Mr Whitten.

“If you think your lender can’t give you a good enough deal then find something better and switch. Refinancing your home takes a few hours’ work but the savings are well worth it.”

When it comes to refinancing you may also be in a better position to get a better deal according to Joust home loan marketplace CEO Carl Hammerschmidt.

“When you get your first loan you are [generally speaking] not in a position to choose terms,” he said.

“However refinancing allows you to discuss new loan terms and this is something which can directly impact the total interest paid on the life of the loan so is definitely something worth discussing.

“The other main point of consideration when refinancing is equity.

“If you have had your home for some time, you may have built up equity and this is a factor linked to the types of home loan options that might be available to you.”

More and more Australians are taking up refinancing as interest rates continue to pick up, with February marking the ninth consecutive rate rise.

Latest Australian Bureau of Statistics figures show in December 2022 that total housing loan refinancing between lenders remained high at $19.1 billion.

If you are thinking of doing so in the future, it pays off to start getting your plans underway.

“The biggest ‘hack’ to making the change would be not waiting until the last minute to start thinking about refinancing,” said Mr Hammerschmidt.

“Start researching your options and gathering information several months before you plan to refinance, so you have plenty of time to compare rates and terms, gather necessary documents, and complete the application process.”

– BY REALESTATEVIEW.COM.AU