The Reserve Bank of Australia has kept the cash rate down to a historic low for almost three years now, but half of all Australians with a home loan are still struggling.
A survey of home loan holders by comparison service Finder found 48 percent are in strife making their repayments.
Forty percent of those surveyed admitted to living “month to month”, while 7 percent are “barely able” to make their payments and 2 percent are already behind in their loan repayments.
“Living month to month is a reality for millions of Australians, so if you’re in this situation, you are not alone,” said Finder insights manager Graham Cooke.
While housing prices in Australia have slumped in the past 18 months, many of existing home loan borrowers will have bought their real estate during the market peak earlier this decade.
Although most experts predicted RBA to hold the rate at 1.5 percent this week, many forecast the next move for rates will be down.
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“The sentiment we’re seeing is that the RBA will likely decrease the cash rate, but not until there’s more economic pressure and clearer direction regarding federal policy,” said Cooke.
For those finding it difficult with their current mortgages, Cooke advised shopping around for a better deal.
“Switching to a rate that is half a percentage point lower, like from 4% to 3.5%, could save the average Aussie more than $1,300 a year on their mortgage,” he said.
“Savings of any kind will be especially important if we are struck with the larger economic downturn that some are predicting.”
About a quarter of financial experts interviewed by Finder said a recession in Australia was “somewhat likely” within the next year.
“So it’s best to hope for the best and prepare for the worst,” said Cooke.
“Do an audit of your finances and see if there are places where you can tighten your belt for the better.”
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