Mortgage stress is up - again: Here’s how to avoid higher home loan repayments

Image: Money stress
Getty Images: Interest rates

Mortgage stress among Aussies increased in January to a record high of more than 1.6 million, says Roy Morgan.

Its latest data shows that 1,609,000 mortgage holders (31%) were 'At Risk' of 'mortgage stress' in the three months to January 2024. 

This period included an interest rate increase on Melbourne Cup Day, with the RBA upping interest rates to 4.35%. 

The figure for January also beat the previous record highs above 1.56 million in August and in September of 2023. 

Furthermore, Roy Morgan reports that the number of Australians 'At Risk' of mortgage stress has increased by 802,000 since May 2022, when the RBA began a cycle of interest rate increases. 

Mortgage holders are considered ‘At Risk’ if their mortgage repayments are greater than a certain percentage of household income – depending on income and spending.

Home loan extremes: Why you should switch to a better interest rate

Meanwhile, the number of mortgage holders considered 'Extremely At Risk' of mortgage stress is now numbered at 994,000 (about 20% of mortgage holders), which is significantly above the long-term average over the last 10 years of 14%, says Roy Morgan. 

Mortgage holders are considered ‘Extremely at Risk’ if even the ‘interest only’ is over a certain proportion of household income.

Despite these worrying numbers, home loans are making it possible for many Aussies to get into the property market. What remains important for people taking on a home loan or even those seeking a cheaper interest rate by refinancing, is to always compare what’s on the market. 

No two home loans are alike, and the difference in interest rates can be startling when you dig into them. A lower interest rate which gives you lower repayments, might just be the difference between being comfortable with your loan and being at risk.

For example, if you borrowed $500,000 with a 6.49% interest rate over 25 years, your monthly repayments would be $3,373. By switching to a 5.99% interest rate you could bring down your monthly repayments to $3,218, saving $155 each month. Now that’s certainly worth the effort of a simple comparison!

At Mozo, we make this task easier for you by comparing some of the top home loans side by side. You might avoid mortgage stress simply by taking the time to find a better home loan. 

Compare top home loans - last updated 21 April 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

    Compare
    Details
  • Flex Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 3 years
    6.37% p.a.

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

    Compare
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    Compare
    Details
  • Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.16% p.a.

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

    Compare
    Details