Savvy's 2022 cost of living survey learns how interest rate hikes are affecting Australian mortgage holders.
- 44% of Australian mortgage holders spend between $251-$500 in weekly repayments
- 23% of mortgage holders spend $501-$750, and a further 18% spend $751 and over
- 53% will cut down on other expenses to prioritise mortgage, 28% will absorb increase, 26% will experience mortgage stress
- 38% of 25–34-year-olds and 35–44-year-olds identify mortgage repayments as a major cost of living stress
A nationally representative Survey conducted by Savvy has shown that 26% of respondents (n=1005) have cited mortgage repayments as a significant cost of living concern.
Extrapolated to the general adult population, this means 5.05 million Australians may be worried about keeping up with mortgage repayments in the coming months.
38% of 25–34-year-olds and 35–44-year-olds said that mortgage repayment increases are a significant concern when it comes to their ability to keep up with the cost of living. Other age groups expressed a lower level of concern about mortgage repayments; 25% of 18-24s, 32% of 45-54s, 18% of 55-64s and only 6% of those aged 65 and over.
According to the survey, 43.86% of mortgage holders spend between $251-$500 on repayments each week, while 23% spend between $501-$750. A further 18% claimed to pay $751 and over per week to cover their mortgage.
The survey identified 8.1 million (42% of n=1005) Australians as having a mortgage.
Mortgage stress imminent
Mortgage stress as defined by the Australian Bureau of Statistics is a financial situation in which a homeowner or household is using more than 30% of their after-tax income to keep up with mortgage repayments.
Research firm Roy Morgan considers homeowners “At Risk” of mortgage stress if they are spending between 25%-45% of their income on their mortgage; an “Extreme Risk” if they are expending 45% of their income on their home loan repayments. They estimated 584,000 mortgage holders were “at risk” at the end of 2021.
A single person earning the average weekly wage ($1,813) would be at risk of mortgage stress if their weekly repayments exceeded $545.
When asked to choose their top three responses to mortgage repayment increases resulting from an interest rate rise, 53% of respondents said they would try to cut down on other expenditure to prioritise their mortgage. 28% of mortgage holders said they will absorb the increase, while 26% said they will simply grit their teeth and experience mortgage stress.
20% said they’re prepared to change lenders or refinance; 13% will lock in a fixed rate with their current lender.
If you are experiencing acute mental stress due to finances, contact Beyond Blue on 1300 22 4636 or Lifeline on 131 114.
Savvy – 2022 Cost of Living Survey (n = 1005)