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Rate rise pain: 145,000 Aussies may need to sell their home

·Personal Finance Editor
·2-min read
Rate rises: An open home sign on the sidewalk demonstrating a home is for sale and a row of houses in an Australian suburb.
Aussies are struggling to keep up with their home loan repayments as interest rates continue to rise. (Source: Getty)

Aussie homeowners are feeling the pinch after the Reserve Bank (RBA) hiked the official cash rate four months in a row, sending mortgage repayments soaring.

And now, many may be forced to sell their homes, according to new research from Finder.

The Finder survey of Australian homeowners revealed one in five - equivalent to just over half a million (551,000) people – would struggle if their home loan interest rate was to increase by 3 per cent.

This included 14 per cent who said they might fall behind on their repayments or other bills.

Another 5 per cent reported they would struggle so much so they would consider selling their home – equivalent to 145,000 homeowners.

Richard Whitten, home loans expert at Finder, said some households were in a dire position as they struggled to cope with the cost-of-living crisis.

“After yet another cash rate increase, mortgage repayments for many borrowers are higher than they were a few months ago and likely to climb higher still this year,” Whitten said.

“Through the rest of 2022, many homeowners on variable rates will start to struggle more and we will likely see the number of defaults rise.

“Those on fixed rates may not notice a difference now, but they’ll get a real shock once that rate stops and they are looking at a fixed-rate cliff.”

The research found almost half (48 per cent) would be able to manage a 3 per cent hike to their home loan, but they would have to cut down on their spending.

Only 25 per cent said a rate rise would not change their lifestyle or spending habits at all.

Whitten said selling your home because you couldn’t afford your mortgage was an “extreme measure” and should be your last option.

“The first thing you can and should do is compare your home loan against others in the market,” he said.

“Even if you can shave just 0.5 per cent off your rate, it’s worth switching.

“Now is also a good time to look at your other expenses and figure out where you could be saving.”

Whitten said creating a budget could limit overspending on non-essentials such as food delivery or online shopping.

“If you’ve scraped every last bit of savings and you’re still struggling, it’s time to call your lender,” Whitten said.

“They may be able to help get you onto a repayment plan that means you can afford to put food on the table.”

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