Yahoo Finance Young Aussie forced to sell home due to RBA interest rate hikes: ‘Tried everything’
Daryll Stokes said he “tried everything possible” to make ends meet but was unable to manage his rising mortgage repayments.
A young Aussie has been forced to sell his home and downsize after he could no longer afford his mortgage repayments. Now, he finally feels like his head is above water.
Daryll Stokes is one of the millions of Aussie homeowners who have battled higher mortgage repayments over the past two years, following the Reserve Bank’s (RBA) 13 interest rate hikes.
The 35-year-old bought his first property in Scone in the Hunter region of New South Wales in 2019. Back then, the repayments on his $260,000 mortgage were $1,242 a month and were “easy” for the full-time abattoir worker to manage.
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“Then, interest rates started going up and it didn’t stop. By the time I left the house, it was $1,668 a month,” Daryll told Yahoo Finance.
Despite making cutbacks to his lifestyle, Daryll said he still wasn’t able to make ends meet following the interest rate hikes. He started falling behind on his mortgage repayments and was forced to put in a hardship application with his bank, ANZ.
“Every time I felt like I was moving forward again, a bill would come - like council rates or insurance bills for home and contents and car,” he said.
“I tried everything possible, within reason, to make ends meet but there was no way I was going to make sacrifice after sacrifice and cut back on things I needed, like going hungry.”
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Daryll ended up making the difficult decision to sell his three-bedroom, three-bathroom home - something he didn’t think he would be doing so soon. Despite being under pressure to make the sale “as soon as possible”, Daryll said he was able to get a good price for the house and sold it for $645,000 in August.
With that money, he repaid his remaining mortgage and had enough money leftover to downsize and buy a home in Scone for $320,000. While the house is smaller, it still has three bedrooms and two bathrooms and is just five minutes from his work.
Daryll said his situation “was not easy” but he now felt like a weight had been lifted off his shoulders and he was happy he made the call to sell.
“It really feels more back on track,” he said. “My finances are moving forward again but [that said] I have also seen the effects of the rising cost of living.”
More Aussies looking to downsize
Daryll isn’t the only Aussie who has been forced to downsize as costs rise, with more older Aussies expected to downsize sooner and more younger Aussies facing mortgage stress forecast to move.
Earlier this year, research by Finder found 13 per cent of Aussies had been forced to find a more affordable property to offset cost-of-living pressures.
About 5 per cent of the 1,054 people surveyed said they were selling their property for a cheaper one to reduce their mortgage costs, while a further 8 per cent were moving to cheaper rentals.
Real estate expert Andrew Winter said downsizing could help families take the pressure off financially, but acknowledged it wouldn’t be realistic for everybody.
“Downsizing from a four-bedroom home when you have three kids and a couple of dogs, to a two-bedroom unit isn’t really an option,” Winter told Yahoo Finance.
The Compare the Market property expert said one alternative could be “financially downsizing” rather than physically downsizing your home. This is where you move to a cheaper home - usually further away from the city - that is a similar size.
“It’s not just about going from a four-bedroom, two-bathroom freestanding home to a two-bedroom unit. That’s not what it’s only about,” Winter said.
The ability to work from home may make this kind of move easier for some Aussies, but obviously won’t work for everyone.
“My tip with downsizing is don’t fight it if that’s the only way,” Winter said. “It’s great if you are in a sales environment or in a job where you can add to your income really easily. Lots of jobs don’t offer that unless you work 24 hours a day.
“You know what you and your partner - if you are a couple - [will be] earning and if you can’t make it work, then the quicker you do the downsize, the less hurt there will be.
“If you dwell on it for two years and get to a point where you can’t pay your credit card off, you’ve already taken a mortgage holiday and gone to interest-only repayments, the longer you sit there and agonise over it, the more expensive it will be.”
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