September 4th 2024.
The current state of mortgage stress in Australia is reaching unprecedented levels. According to a recent study by Finder, more than two in five individuals are struggling to make their mortgage payments, with 45% facing difficulty in August alone. Additionally, 13% have missed one or more payments in the last six months. This is the highest recorded level since Finder began tracking the data in 2018.
What's even more concerning is that homeowners are taking out larger loans than ever before, despite the high cash rate. The average owner-occupier mortgage is now at $634,479, which is a 1.3% increase from July and a staggering 9.3% increase from the previous year. Richard Whitten, a home loans expert at Finder, expressed his worries about this trend, stating that many Australians are spending a disproportionate amount of their income on their home loans.
Whitten continued by saying that millions of mortgage holders have been able to handle rate hikes so far, but are now facing financial strain as their savings and emergency funds dry up. This has resulted in housing becoming a major source of stress for many individuals, with a growing number struggling to stay afloat. In fact, Whitten believes that if your mortgage takes up more than 30% of your take-home pay, you are likely experiencing housing stress. He also noted that the number of people struggling to make their mortgage repayments has reached a disturbing level, as rapidly rising interest rates have put first-time homeowners in a precarious situation.
In light of these concerning statistics, Whitten urged individuals to reconsider their loans. He advised them to compare rates from different lenders to ensure they are not overpaying, and to also consider what their lender is offering new customers. If possible, negotiating a better deal with their current lender is also a viable option. However, if the lender is not willing to accommodate, Whitten strongly encouraged individuals to switch to a better offer. He added that in the game of home loans, loyalty is for suckers.
According to data from the Australian Bureau of Statistics, almost 14,000 mortgage holders were able to negotiate a better rate from their current lender in June 2024. As the housing market continues to put financial pressure on individuals, it is important to keep a close eye on your mortgage and explore all options to ensure you are not overpaying.
In other news, the Paralympic Games Paris 2024 will be broadcasted live and free on Channel 9, 9Gem, and 9Now. Every event will also be available for streaming, ad-free and in 4K, on Stan Sport. So, make sure to tune in and support our incredible Paralympic athletes.
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