The increasing trend in interest rates appears to be triggering mortgage anxiety among Australian households but there are ways to ease these worries.
A study from Aussie found three in four Australian mortgage holders are in the dark about the impacts of the rate increases on their household budget.
Aussie state broking manager Karen Sorrenti said it is worrying that almost a third of mortgage holders did not consider an increase in the cash rate when budgeting for a home loan.
“With increased cost of living pressures, there is no doubt this is a stressful time for many Australians, particularly mortgage holders,” she said.
Ms Sorrenti said there are seven sure-fire ways Australian households can do to deal with mortgage concerns and reduce anxiety:
- Always know your current rate is. If you are on a fixed rate, be informed on when the fixed term ends.
- Try to improve your financial literacy to manage or avoid distress.
- Do some calculations and check your thresholds — find out what amount would put you under financial strain.
- Pay attention to your full financial health and practice a mindful money approach.
- Consider refinancing to a home loan with low or zero fees.
- Look for cashback offers when refinancing.
- Try to get an offset account to reduce interest costs.
Ms Sorrenti said it is crucial for borrowers to equip themselves with the right knowledge and tools to ensure they do not fall into a mortgage stress trap.
“A staggering number of mortgage holders have not taken action or investigated their alternative options which is one key factor in addressing the mental and emotional strain,” she said.
In fact, the Aussie study showed that one in five Australians are already dealing with significant mortgage stress. The rest of Australian borrowers feel that the rising cash rate and the surge in costs of living are already placing “unwanted” tension on their household.
Furthermore, only one in seven mortgage holders were on the front foot and revisited their home loans as soon as the first cash rate happened in May.
Photo by Ketut Subiyanto from Pexels.