Mortgage repayments across Australia have risen by 35 per cent since April, as homeowners stare down the barrel of a seventh cash rate increase from the RBA in November.
That adds up to $730 to monthly repayments for an owner occupier with a $500,000 loan over 30 years.
Repayments on this loan today would be about $2833 per month. This would amount to 37 per cent of a borrower’s pre-tax monthly income, based on the average monthly income for one full-time worker at $7,669, according to the Australian Bureau of Statistics.
Stretched household budgets, the cost of living crisis and the prospect of further rate hikes could push more borrowers to their limits and heightens the need to act now, Canstar’s finance expert Steve Mickenbecker said.
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“Mortgage stress is a real possibility facing many household budgets in the coming months as more rate rises, higher living costs and the cost of Christmas compound the situation,” he said.
“It’s important that borrowers do something now rather than wait until they are desperate, as the options they have now may dry up if they delay action until their situation is dire.”
Mickenbecker said the rule of thumb was if a homeowner spent 30 percent or more of their pre-tax income on your mortgage repayments, they should take action.
Options include refinancing for a lower-rate loan, extending the loan term, and switching to an interest-only loan.
People are encouraged to consult a finance expert before making any changes, or if they’re feeling extra pressure on their budget.
