Survey finds three in five borrowers still need further relief to manage home loan repayments
Majority of Australian mortgage holders remain under financial stress, despite the Reserve Bank of Australia’s (RBA) recent decision to lower the cash rate, a new survey by comparison site Finder has found.
According to the survey, which polled 1,027 Australians including 297 mortgage holders, 60% of borrowers said they still require further rate reductions to manage their home loan repayments. This figure suggests nearly 2 million homeowners are still struggling with affordability following two rate cuts since February.
Finder’s analysis indicates that the cash rate would need to drop to 3.35% — assuming standard cuts of 25 basis points — for repayments to become manageable for most borrowers.
Even after the May rate reduction, half of all mortgage holders reported needing at least two more rate cuts to afford their loans comfortably. Seventeen percent — approximately 561,000 people — said they would require five or more reductions. Meanwhile, 32% of respondents said their mortgage was manageable even before the latest RBA cash rate cut, and 8% noted that only one cut was needed for relief, which they have now received.
Rebecca Pike (pictured above), money expert at Finder, said further rate cuts are essential for household budgets to stabilise.
“We are moving in the right direction, but millions of mortgage holders will lose grip on their loan if interest rates don’t keep steadily falling,” she said. “Without significant rate cuts from the RBA, many will face serious financial strain by the new year.”
Pike added that some borrowers had depleted emergency funds to meet rising costs and mortgage obligations.
“Households are desperate for home loan relief in the form of multiple rate drops,” she said. “If your provider is not competitive, now is the time to consider refinancing. We’re beginning to see lower fixed rates emerge as variable rates fall and lenders ramp up competition for new business.”
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