Rates remain on hold, but these home owners are doing it the toughest

Homeowners with a high loan-to-value ratios and borrowers with higher loan-to-income ratios were the most at risk.Experts say most struggling borrowers are choosing to sell before they’re forced to.Highly indebted home owners, including first home buyers and investors with multiple properties, will be hit hardest after the Reserve Bank’s decision to keep rates on hold, experts say.

More owner-occupiers are behind on their home loans by 90 days or more than investors , inching closer to COVID-highs. While first home buyers and borrowers who have rolled off fixed rates are at similar rates of arrears to mortgage holders overall, they are often considered most at risk too, experts say.

“If you’ve got equity in other properties, from a tax perspective, it’s best to apply all your gearing to investment property to make that loan as big as possible,” he said. Commonwealth Bank head of Australian economics Gareth Aird said it was likely most borrowers 90 days or more behind on their loans would be people affected by the weakening labour market. The unemployment rate grew to 4 per cent in May.

“There could be some home owners who were struggling with repayments who have already sold their home. But we don’t get visibility on that,” he said.

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