One in three Aussies struggle with mortgage debt
- October 30, 2024
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Mortgage stress hits younger generations hard
New research from Finder revealed a growing concern among homeowners regarding mortgage debt.
A survey of 1,013 respondents, including 331 mortgage holders, found that one in three (33%) believe they have borrowed too much on their home loans. This figure marks a significant rise from 21% just a year ago.
This troubling statistic translates to over 1 million homeowners feeling overwhelmed by their debt.
The struggle with mortgage debt
Richard Whitten (pictured above), home loans expert at Finder, highlighted the financial strain many borrowers are experiencing.
“Households are desperately trying to cut expenses or boost their income to avoid financial strain, but this financial safety net won’t last forever,” Whitten said.
There is a glimmer of hope, as Whitten noted, “The good news is that interest rates could drop in the next couple of months – which would be a huge relief for those who overextended themselves.”
Younger generations feeling the pressure
Finder’s research showed that younger generations are more likely to find themselves in precarious financial situations.
Nearly half (46%) of Gen Z respondents indicated they stretched their finances too thin, followed by 37% of millennials.
In comparison, only 26% of Gen X and 20% of baby boomers reported the same.
Whitten urged those struggling with mortgage stress to reach out to their lenders promptly.
“Take a fresh look at your situation and think about the best ways to alleviate mortgage stress,” he said.
Options for home loan relief
Whitten recommended refinancing as a potential solution for those struggling with mortgage stress
“Refinancing is a great way to lower your interest rate and reduce your monthly repayments, saving you money over the length of your loan,” he said.
He also mentioned that lenders might offer options such as temporary interest-only payments or extending the mortgage term to ease monthly payment pressures.
“This will cost you more interest in the long run, but can offer much-needed relief in the short term,” he said.
Finding better deals
Whitten stressed the importance of evaluating loan options using the Finder Score.
“If your home loan doesn’t start with a Finder Score of 8 or 9, then you could be getting a better deal elsewhere,” he said.
Finder’s research indicated that one in five (20%) homeowners are currently struggling with repayments due to borrowing beyond their means. Additionally, 15% admitted to paying too much for their homes, forcing them to take out larger loans to cover the difference.
Resource: brokernews.com.au