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RBA's 'blunt' rate hikes create $37.4 billion mortgage-holder divide

While Aussies are stashing cash in their home loan offset accounts, new data reveals others are falling behind on their repayments.

The Reserve Bank’s (RBA) aggressive interest rate hikes have created a massive division between mortgage holders, with some able to stash away extra cash and others falling behind on repayments.

The total amount of cash stashed in mortgage offset accounts hit a new record high of $265.45 billion in the December quarter, the latest figures from the Australian Prudential Regulation Authority (APRA) revealed.

That’s a 16 per cent rise - or an extra $37.4 billion - since the start of the rate hikes in May 2022. In the December quarter alone, mortgage holders added $8.25 billion, or an extra 3 per cent, to their offset accounts.

Are you a mortgage holder struggling with repayments? Contact tamika.seeto@yahooinc.com to share your story

RBA governor Michele Bullock and properties. Mortgage interest rates concept.
The RBA's interest rate hikes have created a tale of two cities for mortgage holders. (Source: AAP/Getty)

But it’s a tale of two cities, with arrears also climbing simultaneously. According to APRA, mortgages that are 30-89 days overdue rose for the fifth quarter in a row by $1.54 billion to a total of $13.28 billion.

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Mortgage repayments that are 90 days or more overdue are also on the rise, increasing $1.3 billion over the quarter. However, as a share of credit outstanding, both figures are still low by historical standards.

RateCity research director Sally Tindall said the figures “highlight just how blunt the RBA’s cash-rate hammer actually is”.

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“Some borrowers continue to stash extra cash into their mortgage, while others are calling up their bank asking to be put on their hardship programs,” Tindall said.

She said Aussies tended to “bunker down” during tough times but this wasn’t possible for many borrowers.

“Parking every spare dollar in the mortgage is a great way to get at least some relief from rising rates, but the reality is some borrowers just don’t have a dollar to spare,” she said.

Despite arrears being below pre-COVID levels, Tindall expected the value of loans falling behind on repayments would rise in the coming months, with owner-occupiers left with “limited levers to pull”.

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Housing affordability hits ‘crisis point’

The average household is now spending just under 48 per cent of their income on mortgage repayments, a recent report by the Real Estate Institute of Australia (REIA) found.

This is tipping housing affordability for mortgagees to an “all-time crisis point”. Real Estate Institute of Australia president Leanne Pilkington said it was the worst on record.

“Housing affordability in New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory is at its lowest point in 20 years,” Pilkington said.

Separate research by Roy Morgan found 1.6 million mortgage holders (31 per cent) were ‘at risk’ of mortgage stress in January, beating the previous record highs of 1.56 million in August and September 2023.

The research firm noted this included the Melbourne Cup Day interest rate hike in November, where the RBA increased the cash rate to 4.35 per cent.

Tindall urged mortgage holders struggling with their repayments to contact their bank to tell them they needed help.

“Banks don’t want to see you default on your home loan any more than you do,” Tindall said.

“It’s also worth calling the National Debt Helpline to get in touch with a financial counsellor.”