Australian borrowers are in the dark about their next possible move as they navigate the changing environment amid the rising interest rates.
A study by Resolve Finance found that more than half of borrowers have no plans regarding their home loans and property over the next 12 months.
Resolve Finance managing director Don Crellin said the borrowers seemed to be unsure of the steps they needed to take to insulate themselves from the impacts of the changing economic conditions.
“We are seeing a dramatic shift in the proportion of family budgets now being eaten up by mortgage repayments and for most Australians this will increase as fixed interest loans expire and interest rates continue to rise,” he said.
“There are some simple steps consumers can take help them navigate these changing mortgage conditions and provide more certainty over their future expenses — these include locating current mortgage details, so consumers know the exact expiry date of their fixed rate, how much they owe on the loan and what rate they are currently paying.”
Only 22% of the borrowers surveyed have concrete plans of refinancing and renovating their properties.
Meanwhile, around one in 10 borrowers eye selling their homes to upsize.
For around half of fixed-rate borrowers, immediate refinancing is the next step, while around two in five are still watching where interest rates are going before doing so.
Recent data from the Australian Bureau of Statistics showed how refinancing activity has hit new record high.
Still, 9% said they have no plans but to let their rates roll over to their lenders’ standard variable rate.
Here are the other highlights of the study:
- For 20% of borrowers, an increase of $500 in monthly repayments would push their loans out of affordability, forcing them to sell.
- Over the next 12 months, 7% of Australians are planning to sell their home to downsize while around 1% are looking to knockdown their home and rebuild.
- Around 22% of borrowers are on fixed rate while over 20% are on split-rate option.
- Roughly 55% of borrowers have a variable-rate home loan.
- Approximately 2% of borrowers do not know what type of interest rate they are paying for.