Mortgage stress is up: Are you comfortable with your home loan rate?

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New research from Roy Morgan shows that 1,514,000 mortgage holders (30%) were 'at risk' of 'mortgage stress' in the three months to October 2023. 

This period included three RBA meetings at which interest rates were left unchanged and was before the increase on Melbourne Cup Day. 

Despite a slight easing in mortgage stress in October, this was only the third time in the history of the index that over 1.5 million mortgage holders were considered 'at risk'. 

Meanwhile, the number of mortgage holders considered 'extremely at risk' of mortgage stress is now at 967,000 (20%), which is significantly above the long-term average over the last 10 years of 14%. 

Credit reporting firm Experian has similarly looked into Aussie households that are at risk of ‘interest rate cliffs’, where mortgage owners come off a low fixed home loan rate to suddenly be slugged with a much higher variable rate. 

It asked leaders in lending risk about this and 34% believe multiple waves of increased borrower hardship have already started, while 30% believe Australia will soon experience more cases of borrower hardship.

Loans taken out more recently are showing elevated signs of stress, with borrowers that took out home loans since 2019 three times more likely to miss repayments than those that took out a mortgage before 2015 and twice as likely as mortgages opened between 2016 and 2019. 

“In the last two years the levels of missed repayments and arrears are getting progressively worse, in a shorter period of time,” Experian’s director of client advisory, credit services, Charlotte Rankin said.

“Within five months, more than 1 in 200 new mortgages opened at the end of 2022 were in arrears, compared to it taking 24 months to reach similar levels for mortgages opened in early 2021.” 

According to recent Mozo analysis, switching from a rate starting with '2' to one starting with '6' could mean an extra $780 a month in repayments on a $350,000 home loan over a 25 year loan term. 

The same rate change on a $1,000,000 mortgage, over the same period, equates to a whopping $2,229 a month more.

For many of the homeowners surveyed, this is their reality. Two out of five surveyed said they had already switched from fixed rates starting with '1' or '2' to variable rates starting with '5' or '6'.

Home loan interest rate comparison is essential 

All of this data points toward the importance of doing your research before taking out a home loan. 

Home loans are typically large sums of borrowed money but because they're paid back over many years, it might not seem so daunting. However, the interest rate you get on your home loan is crucial because it can determine how much extra money you pay on top of the loan each year. 

At Mozo, we do the hard yards for those looking for a good value home loan. Our experts scour the marketplace to find out which home loans offer customers the best value, flexibility and features. You can start by comparing some of the top home loans below. 

Compare the top home loans - last updated 23 February 2024

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

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    5.80% p.a.
    fixed 3 years
    6.05% p.a.

    Enjoy the security of a competitive fixed interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply). Mozo Experts Choice award winner.

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    Details
  • Mozo Expert Choice Badge
    Home Variable Rate

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.15% p.a.

    Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.

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  • Straight Up

    Obliterate, Owner Occupier, Principal & Interest, <50% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.24% p.a. variable
    6.24% p.a.

    Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

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