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$158 billion mortgage ‘time bomb’ about to blow

A composite image of a row of terrance houses in Sydney and Australian currency to represent mortgage repayments.
Aussies on fixed rate mortgages are about to face a major cliff. (Source: Getty)

Thousands of borrowers on fixed-interest home loans due to expire could be plunged into mortgage stress by Christmas.

According to Finder analysis of ABS statistics, $158 billion of fixed-rate mortgages are set to expire by the end of 2023.

This could increase repayments by as much as $10,872 a year on average.

An estimated $29.8 billion worth of fixed-rate mortgages are set to expire by the end of 2022, which will mean an extra $641 in monthly repayments for Aussie homeowners by Christmas.

Finder’s Consumer Sentiment Tracker found one in four (25 per cent) Aussie’s already struggled to pay their home loan each month.

Fixed-rate mortgages hit a peak of 46 per cent of all new home loans in July and August of 2021.

However, these low fixed rates are set to expire into variable interest rates over 5 per cent over the next 12 months.

With the average loan size of $509,422, Aussies could expect a $906 increase in their monthly repayments on the average owner-occupier home loan by the end of 2023.

Head of consumer research at Finder Graham Cooke said the fixed-rate-interest “cliff” was a very scary prospect for Aussie borrowers, describing it as a “time bomb”.

“Hundreds of thousands of Aussies will be hard hit, with many facing mortgage stress if they aren’t adequately prepared,” Cooke said.

“This is a very significant spike in repayments that many will simply not be able to afford.”

Cooke urged Aussies to only spend what they needed to during the remainder of 2022 and to repay any additional savings on their mortgage.

“Very few Aussies have the emergency funds they need to handle a monthly rise of this proportion,” he said.

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