1,569,000 Aussies still under the pump despite rate cut

Aussie households are feeling the pinch, with a single rate cut unlikely to relieve them of their mortgage stress.

Some homeowners might be rejoicing over the Reserve Bank’s decision to cut the cash rate by 25 basis points on Tuesday, but for many, one rate cut won’t cut it.

Aussies need a lot more than a single rate cut to make it through, Finder survey data shows.

More than a third of borrowers surveyed will need their monthly repayments to drop by $500 or more before they start feeling financially comfortable.

One rate cut is unlikely to save under-the-pump mortgage holders. Picture: NewsWire / Nicholas Eagar

Similar Roy Morgan research released at the end of January showed 788,000 more Aussies were “at risk” of mortgage stress, although the revamped stage 3 tax cuts were stopping this figure climbing.

In December, 27.9 per cent of mortgage holders, or 1,595,000 households, were considered “at risk”.

Tuesday’s cut is only projected to decrease the number of “at risk” households by 26,000 to 1,569,000 despite the cash rate falling from 4.35 to 4.10 per cent.

This was the first move on interest rates since May 2022 after the RBA left them on hold through 2024.

Finder head of consumer research Graham Cooke said many mortgage holders were still in a difficult spot.

“This rate cut is a lifeline for millions of Australians teetering on the edge of mortgage default, but for some, it may be too little, too late,” Mr Cooke said.

“With millions of homeowners struggling to meet their repayments, the pressure on household budgets has reached a breaking point.”

Governor Michele Bullock and the RBA board cut rates on Tuesday by 25 basis points for the first time since the Covid pandemic. Picture: NewsWire / John Appleyard

Anthony Albanese said Tuesday’s rate cut “doesn’t solve all the problems”, although he believes it shows Australia is heading in the right direction.

“We have fought very hard to get inflation down, wages up, and now interest rates are heading in the right direction, which is down,” Mr Albanese said on Gold FM.

“And so that is positive for Australians, and I think it is welcome news while, of course, not meaning that cost-of-living pressures have gone away

“But when you have those indicators – inflation down, everyone’s got a tax cut – and the right thing’s going up as well, which are wages, then that is a positive direction and it’s been hard.”

“Inflation had a six in front of it when we came to office and was going up. Now it’s got a two in front of it and is going down.”