The 12 rate hikes since May 2022 means a borrower with a $1 million loan and 2.86 per cent variable rate at the beginning of the rate increases would have seen their monthly repayments climb $2269, according to RateCity analysis.on the brink of financial hardship“People are, for the most part, holding it together and getting by, but it’s now getting to a point where the average person is running out of things to cost-cut,” says managing director of Pure Finance Brendan Dixon.
Emergency strategies don’t come for free, says Effie Zahos, as borrowers end up paying more interest over the long term.– are beginning to look at side-door ways to bring good-quality borrowers through their doors, even if they don’t meet the traditional serviceability benchmarks. “They’re trying to take away a bit of the friction of moving. The banks are obviously very driven by new-to-bank customers, and they want those volumes,” says Dixon.
But while the changes make it easier for some borrowers to move, it doesn’t go anywhere near completely alleviating the challenges for those in mortgage prison, says Zahos. Dixon adds that while the policies will help some borrowers, they will be limited to those who are keeping up with their repayments and can still prove that they’re not at risk of falling into financial stress, or among – he estimates – around 10 per cent of borrowers in the mortgage prison bucket.
“You’ve got to question, ‘why is it advertised X when I’m paying Y’. That’s your first port of call.”The next step is looking at your bank’s hardship policy and getting in touch. “You can claw back $300 or $400 on the average mortgage per month by either going interest-only or increasing your term.”