(Credit: Eliza Bavin-psnews)
According to new data, Australians who have mortgages are concerned about making their mortgage payments, with 30% admitting that defaulting on their house loan is a big worry.
Three-quarters of Australian mortgage holders, according to a study by Aussie, are unaware of how the RBA’s cash rate increases will affect their household budget, leaving them in need of clarification.
It’s concerning that 28% of Australians with mortgages did not budget for a hike in the cash rate at all, despite the fact that they were required to do so in their home loan assessments.
The impact of a cash rate of 3% or less was only budgeted for by another four out of ten people (38%).
There’s no denying that many Australians are under stress at the moment, especially those who have mortgages, according to Karen Sorrenti, the manager of Aussie state broking.
According to our most recent research, 18% of Australians with mortgages are experiencing “severe mortgage stress.”
“An additional four out of five (81%) indicated that their household is experiencing unwelcome tension as a result of the rising cash rate and rising expense of living.”
According to Sorrenti, a startling amount of mortgage holders have not taken any action or looked into other options, such as refinancing.
Seven techniques to reduce mortgage stress
- Stop, look and ask – always know what your current rate is and, if it’s fixed, ensure you know when it ends
- If you’ve avoided financial literacy, now is the time – it’s the gateway to managing, or avoiding altogether, financial distress
- Do some calculations – be one step ahead on what you can afford for repayments and what amount would put you on the path to financial strain
- Practice a mindful money approach, paying attention to your full financial position
- Refinance to a home loan with low or zero fees
- Take advantage of refinance cashback offers
- Consider an offset account to reduce the amount you pay in home loan interest
The real estate crisis might not be as bad as we assume
Homeowners have been anxious about the property downturn as well as the burden of increasing interest rates.
Many people who bought homes during the most recent housing boom are worried that if property values decline, they will slip into negative equity.
When a person has paid more for a property than it is worth, they have negative equity.
For instance, if a buyer paid $1 million for a house with only a 10% down payment, and the value of the house later drops by 20%, they would owe more on the house than it is worth.
A recent report from Domain suggests that the property market downturn may not be as severe as some might think.
According to Domain research and economics chief Nicola Powell, a return to pre-pandemic prices seemed unlikely based on study of four property cycles since the early 1990s.
Many Australians may reasonably feel unsure about their property journey when home prices decrease, Powell said.
But it’s crucial to keep in mind that property has historically experienced upswings and downturns, and there are things we can learn from earlier price cycles.
The notion that the property market has significant boom and bust cycles is contested by the Domain report.
Home values frequently see a spike followed by a modest dip, a flattening off, or a period of slow growth before heading higher once more.
The average upswing saw a 32.7% increase in housing prices from peak to trough.
The average downturn, in contrast, saw a 3% decrease in housing prices from the top to the bottom.
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