Two-thirds of home owners fear that another hike in official interest rates will place extreme stress on their mortgage, forcing them to either refinance or potentially lose the family home, according to a new survey.
The online poll conducted in March by Loan Market and X Inc Finance, Australia's fastest growing mortgage broking group, found that after 12 successive increases in official interest rates by the Reserve Bank many home owners were stretched to the limit financially.
About 32.5% of respondents said another rate rise would require them to refinance their mortgage while 33.3% indicated they were near breaking point already and may have to consider selling their residence. In total, 82.5% of respondents felt that another rate rise would require them to take at least some cost-cutting action to make ends meet.
Enough already! I'm worried we'll lose the house."These findings illustrate the severe strain that many families are under and the tension they have to live with every day, worrying about the future direction of interest rates," said Jennifer Nielsen, Loan Market and X Inc Chief Executive. "It also highlights the two-tier nature of the economy, where employment is at record highs yet housing affordability is at record lows.
"We may have gone through an extended period of ‘mortgage love' but mortgage stress is taking over and it is not just occurring in isolated pockets. Severe financial strain is becoming increasingly common and families across the country are really on a knife-edge as they wait for the next move in interest rates."
Only 17.5% of respondents to the survey thought another increase in interest rates would not cause a substantial problem.
Ms Nielsen said Loan Market and X Inc believed there to be an equal chance of the Reserve Bank raising the cash rate or leaving it unchanged at 7.25% when the bank's board meets again in May.
X Inc Finance survey results
Q: How are you coping with your mortgage following recent interest rate rises?
- Enough already! I'm worried we'll lose the house - 33.3%
- We've cut back as far as we can - the next step is refinancing - 32.5%
- It's not a big problem and is unlikely to be in the future - 17.5%
- Another rate rise and we'll have to rein in household spending - 16.7%
