A study has revealed rate rises and mortgage anxiety are severely impacting Aussie homeowners’ personal lives.
The survey, by financial platform MNY, asked Australian mortgage holders how rising rates were impacting them personally – or impacting the mortgage holder they were living with.
With 1,000 respondents nationwide, 75 per cent said rate rises have adversely impacted their personal lives or well-being.
Almost one in two (49 per cent) respondents reported heightened stress and anxiety, and 29 per cent had mental health issues or sleeplessness.
Homeowners said the added financial strain had severely impacted several areas of their lives, including poor diet (19 per cent), poor physical health (16 per cent), weight gain (13 per cent) and decreased performance at work (9 per cent).
The data also revealed that eight per cent of mortgage holders have worse relationships with family, and 11 per cent have worse relationships with their partner over the financial impact of rate rises.
According to MNY Business Analyst Sabina Khanusiak, more than $305 billion was borrowed to buy or renovate homes in the first ten months of 2021 while interest rates were at a record low.
“These borrowers have significant financial strain if they are on, or are about to go on, variable-rate loans,” she said.
“When we analysed the pool of respondents who were impacted, almost two-thirds (65 per cent) are living with increased stress and anxiety, suggesting that rate rises have given borrowers very little disposable income.
“It is impacting all areas of their lives, and it is becoming a social issue as much as a financial one.”
With the mortgage interest rate now averaging around 6.5 per cent, households with a $500,000 mortgage have seen their repayments increase by $1,500 per month during a cost-of-living crisis.
The mental health and relationships of young Australians at most risk
According to the survey, recent rate hikes affect young homeowners the most. Eighty-three per cent of 18 to 34-year-old borrowers admitted the added financial pressure had impacted their mental health or relationships, along with heightened stress and anxiety (49 per cent).
In comparison, 78 per cent of 35-54-year-olds were impacted somehow. More than half (54 per cent) have higher stress and anxiety levels, followed by 35 per cent experiencing a strain on their mental health, and 33 per cent suffering sleeplessness.
Older age groups revealed that they were least affected by rising rates, with two-thirds (67 per cent) of over-55s feeling impacted – mostly by heightened stress and anxiety levels.
Ms Khanusiak said the amount of stress young Australians faced was “worrying”, especially since many are new to borrowing.
“This current economic climate provides no encouragement or reason to buy property, leading to a rental crisis that is causing stress and anxiety for renters alike,” she said.
“These are uncertain times for Australians who are struggling to secure and retain a place to live.”
Losing faith in the RBA
Alongside the personal damage inflicted by rate rises, MNY also found that 75 per cent of these homeowners would not trust Reserve Bank of Australia (RBA) forecasts again, even with the appointment of new Governor Michele Bullock.
In 2021, RBA Governor Phillip Lowe said several times that rates would not rise until 2024. Since then, the RBA has increased the cash rate 12 times – to 4.1 per cent by June 2023 – a record high that was last seen in 2011, when the cash rate peaked at 4.75 per cent.
“The RBA has a significant challenge ahead, as keeping interest rates unchanged does not alleviate the financial strain felt by homeowners,” said Ms Khanusiak.
“The RBA’s new Governor needs to regain the trust of 75 per cent of the mortgagor population and help ease the financial burden that a significant portion is experiencing.”
