Many financially-stretched mortgage borrowers admit it’s a struggle to meet their mortgage repayments, and many are cutting back on personal expenses to avoid arrears, according to new research.  

The alarming new research was released by UBank, a division of National Australia Bank. Finances have gotten so tight that one in four borrowers admits they’re stressed and many are buying homes they can barely afford.

Even though interest rates are sitting at historically low levels (many fixed and variable rate loans are under the 4% mark), borrowers are being forced to take on extra hours at work and give up social events in order to afford repayments.  

UBank reports that 56% of borrowers have cut back on time spent with their children so they could earn money, and 54% have given up a family holiday due to financial strain. Approximately 59% admit they’ve cut a family holiday short because of mortgage pressures. 

Lee Hatton, chief executive officer of UBank, called the results “concerning” and highlighted that many mortgage borrowers are only just meeting their repayments.

“Fifty per cent of homeowners are seeing repayments take a toll on their social life—declining at least two social outings a month in order to meet their mortgage repayments,’’ she said.  

Hatton warned that many borrowers are taking on too much debt in today’s low interest rate environment. “What we are seeing are people buying houses or ‘the dream,’ which is too big for their needs,’’ she added.

Jessica Darnbrough, head of corporate affairs at Mortgage Choice, called the results “alarming.” She said there are things people can do if they feel financially pressured.

“Given that rates have fallen to all-time lows, now really is the perfect time for borrowers to review their mortgage,’’ Darnbrough said. “Those who haven’t reviewed their mortgage or changed their repayments in the last couple of years may be overpaying on their mortgage and not even realise it.’’

Over the last year, mortgage rates have dropped by up to 0.5%. When rates finally do rise, Darnbrough said borrowers need to be able to afford any increases to their home loan repayments.