It seems spending has ground to a halt amid widespread mortgage stress, according to Finder’s Housing Market Report: Navigating Refinancing in 2023.
The report which combines lending data with a survey of 1,016 Australians who have recently refinanced or are planning to – revealed homeowners are taking drastic measures to reduce expenses from skipping meals to cancelling holidays.
|What actions, if any, have you taken to deal with your mortgage stress?|
|Cut back on eating out / getting delivery (e.g. Uber eats)||45%|
|Stopped / cut back on other non-essentials||33%|
|Shopped around for cheaper alternative products||32%|
|Set up a budget||31%|
|Cut back on beauty treatments / started doing them myself||23%|
|Cancelled a holiday||19%|
|Compared my other regular expenses on a comparison website to find better deals||12%|
|Saw a professional to organise my finances||5%|
|Moved my child to a different school to reduce school fee costs||3%|
|Source: Finder’s Housing Market Report: Navigating Refinancing in 2023 of 1,016 respondents who have refinanced or are planning to|
It also found that almost half (45%) of respondents have cut back on eating out to deal with mortgage stress, while 1 in 3 (33%) have cut back on other non-essentials.
Shopping around for cheaper alternative products (32%), cancelling a holiday (19%), and skipping meals (9%) round out the top five tactics refinancers are implementing to cope with rising interest rates.
A small proportion (3%) have even moved their child to a different school to cut back on costs.
Many mortgage holders have been wounded by 12 interest rate rises in 17 months
Finder’s Consumer Sentiment Tracker shows that 3 in 4 Australians (75%) are somewhat or extremely stressed with their current financial situation in September.
This includes 84% of mortgage holders, up from 76% in September 2021.
Mr Richard Whitten, home loans expert at Finder said:
“It’s a very worrying situation for millions of households and is causing a huge disruption to people’s lives.
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Many Aussies are taking drastic action to avoid mortgage stress.”
Further, Finder analysis of ABS home loans data reveals a record $22.1 billion worth of mortgages were refinanced in June.
Whitten said Aussies are refinancing in droves as they struggle with serviceability.
He further commented:
“Refinancing can be a silver lining for distressed homeowners, and Australians are prepared to switch if it gives them more breathing room.
Some are even refinancing to lengthen their mortgage at a similar rate to decrease their monthly payments.
Now is the best time to shop around and find a better deal – an interest rate that might have been competitive a few years ago may no longer be the best fit today."