Mortgage stress forces major cutbacks

Thursday 14 October 2010

Article by Mozo

A record number of Australians are packing their own lunches, cancelling holidays and buying in bulk as the impact of rising mortgage repayments continues to hamper spending, new research shows.

According to the latest Home Finance Index by Bankwest and the Mortgage and Finance Association of Australia (MFAA), more than half of borrowers are sacrificing a range of everyday necessities to accommodate higher interest rates.

Eating out and going out less topped the list at 50 per cent while 47 per cent of respondents said they were taking lunches to work to cut costs. Another 42 per cent revealed they were taking cheaper holidays or not taking breaks at all.

Aussies struggling with mortgage repayments could choose to compare home loans and switch provider. MFAA chief executive officer Phil Naylor commented: "Understanding the structure of your mortgage is the key to paying it off sooner.

"Borrowers can't avoid rising interest rates but they can minimise the impact by considering making an extra mortgage repayment with extra funds that would have otherwise been used for things like holidays."

Earlier this week, QBE LMI's Australian Housing Outlook report by BIS Shrapnel forecast that house prices will continue to rise over the next three years.

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