‘High and dry’: Interest rate pain hits home for thousands
Around 165,000 homeowners would be forced to sell their homes if interest rates remain high until 2025, with around the same number of people signing up for second jobs to cope.
Around 165,000 homeowners would have to sell their homes if interest rates remain high until 2025, with around the same number of people signing up for second jobs to cope.
A Finder survey warned 27 per cent of those surveyed were not prepared for rates to stay high – equivalent to 891,000 people.
It found 5 per cent of homeowners – equivalent to 165,000 people – said they’d have to sell their house if it remained high into next year.
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Finder personal finance expert Sarah Megginson said many who were counting on a rate cut were now “high and dry”.
“Many homeowners are stretched so thin financially, they’re facing the prospect of having to sell their home, or they’re turning to loved ones for support with paying their bills,” she said.
“With interest rates projected to remain high until next year – and some even calling for a hike in August – mortgage holders could be waiting longer than they expected for this pressure to ease.”
Close to half (46 per cent) had already cut expenses elsewhere, about one in five (22 per cent) said they could still comfortably cover their mortgage and 5 per cent said they’d taken a second job to help with repayments.
“Now is the time to take a look at your budget and look for areas where you can save money on your household bills, and cut back on discretionary spending. A good place to start is insurance: car and home insurance premiums have skyrocketed over the last 12 months, so shopping around for a better deal is crucial.”
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Of those who said they were not prepared for mortgage interest rates to stay high until 2025, 11 per cent said they’d have to go interest only, 5pc said they’d have to sell their house, 4pc said they’d have to borrow money to afford the mortgage, 3pc said they’d have to rent a room out in their house, 2pc would have to ask for a repayment holiday and 1pc said they’d default on repayments.
Ms Megginson said “if you’re struggling to make your mortgage payments, communicate openly with your lender, as they will be able to offer hardship programs such as a mortgage holiday”.
“This can extend your loan term and add thousands of dollars to your original loan amount, so it costs more longer term, but as a short-term strategy it could keep you from losing your home.”
“Every bank has these hardship policies, so be upfront and transparent with them so you can get access to the best possible support.”
Originally published as ‘High and dry’: Interest rate pain hits home for thousands