Aussie households struggle to make mortgage payments

More than one million Australian households can barely pay their mortgage and a worrying trend from refinancers is leaving experts concerned.

More than one in three Australian households are struggling to pay their home loans in the new year and a concerning trend is emerging among refinancers as a result.

New Finder research found 1.1 million mortgage holders were “struggling to pay their home loan in January”, up 24 per cent from January 2022.

While the percentage of homeowners struggling to meet payment deadlines is down from a record high of 41 per cent in June 2023, 35 per cent of Australian households are still battling to make monthly payments towards their mortgage.

Finder research revealed mortgage holders with significantly higher costs were increasing their mortgage term to reduce monthly repayments, a trend that concerned experts.

Finder home loan expert Richard Whitten warned that while refinancing could “free up some spare cash” it could prove a costly move long term and urged homeowners to remain cautious.

Finder home loan expert Richard Whitten warns Aussie homeowners to remain cautious when refinancing.

“Review your existing home loan to make sure you’re not paying more than you need to and pay attention to what your lender is offering new customers,” Mr Whitten said.

“Try to negotiate it down with your current lender but also remember to look at what rates other lenders offer because you may find a better deal.

“You can try to stick to your original loan’s term if you do decide to refinance so it doesn’t reset the clock, or you can start a new 30-year term but focus on keeping your repayments higher than the required monthly repayment.

“Your aim should be to pay off the new home loan faster either with extra repayments or better yet by building up your offset account.”

The data found 18 per cent of refinancers extended the length of their home loan when they refinanced and added 3.5 years onto their home loan when switching banks.

Mr Whitten said it was vital Aussies chose a home loan that would offer them the best deal as homeowners worked to keep their finances on track.

“Millions of Aussie borrowers are experiencing financial stress due to the fact that their monthly mortgage repayments have blown out so rapidly,” Mr Whitten said.

“The start of the year is a great time to assess where you might be able to save. Your home loan is the best place to start, as it’s likely your biggest expense.”

New Finder data has revealed more than one million Aussie homeowners are struggling to make monthly mortgage payments.