Around two-thirds of homeowners still believe that Australia is in a property bubble that will likely burst soon as they come closer to a fixed-rate cliff.

That was the highlight of a recent Aus Property Professionals study, which also found that the sentiment was apparent and consistent across different age groups and state demographics.

Aus Property Professionals founder Lloyd Edge said the negative sentiment towards property is not surprising, given the success interest-rate hikes.

“Keep in mind that in order for a major housing market crash to happen we would need much higher unemployment rates and a huge oversupply of property,” he said.

“None of these things are occurring right now — inflation figures have fallen for a second month in a row, there is no sign of a recession at this stage and jobs data remains strong.”

Still, Mr Edge said the last 12 months have been very challenging due to the series of rate hikes which was not anticipated until 2023.

“It’s expected that the so-called mortgage cliff is due to hit in the second half of 2023- that’s roughly 800,000 homes that will be rolling off 2% fixed interest rates and moving on to 5% or 6% variable rates, leading some experts to predict a wave of defaults or urgent sales,” he said.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured Online ExclusiveUp to $4k cashback
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
5.99% p.a.
5.90% p.a.
Principal & Interest
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
Principal & Interest
  • Find out your loan eligibility in 2 minutes or less
  • Complete your application in less than 20 minutes
  • Low fees and fast approval times
5.95% p.a.
5.95% p.a.
Principal & Interest
5.94% p.a.
5.95% p.a.
Principal & Interest
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

Managing the fixed-mortgage cliff

Mr Edge believes there are several strategies to tackle the mortgage cliff, including the following:

Reach out to a mortgage broker

The first step fixed-rate borrowers must take is to speak with their mortgage broker, who can provide them with options on how to tackle the likely switch to variable payments.

“Your broker might be able to help you refinance to a better interest rate, which will alleviate some of the pressure on you,” Mr Edge said.


Mr Edge said this refers to renting out a portion of the residential property to generate income that can be used to pay off monthly expenses and mortgage expenses.

“To get extra cash-flow coming in, you might want to consider renting out your spare room, or rooms, to help cover your mortgage repayments,” Mr Edge said.

In a recent Your Mortgage story, Suburbanite principal Anna Porter said AirBnb could save everyday Australians from rising day-to-day costs and mortgage payments.

“Whilst the banks typically assess borrowing at a higher rate, the current interest rates are at 11-year highs, so we expect to see a real squeeze on the budget as these fixed rates wear off,” she said.

Make additional repayments

Extra repayments will allow borrowers to reduce their principal, which will lower their interest costs.

“The extra repayments you make now will save you on interest down the track and put you in a better financial position for when your mortgage becomes variable,” Mr Edge said.

Build a savings buffer

The Reserve Bank of Australia notes that Australians still have a significant savings buffer, which will shield them from immediate impacts of rate hikes.

Mr Edge said a solid savings buffer of three to five months’ worth of essential expenses would be enough.

“This will ensure you feel secure and prepared for any unexpected financial challenges that might occur,” he said.

 Transferring all savings to an offset account would also be beneficial, as it can lower the interest charged onto the home loan

“You’ll not only end up with a healthy savings buffer, but you’ll pay down more of the principal faster this way,” Mr Edge said.

Consider investing in cash-flow positive assets

For those who can afford to, getting an investment property with a high-rental yield can significantly help.

This, however, has become challenging given the high interest rates.

“A professional buyer's agent can help advise you on how to find properties with a high rental yield,” Mr Edge said.


Photo by Jordan Benton from Pexels.