The mortgage cyclone ripping through household budgets

New consumer research from Mozo uncovers that many Australians are seeing large amounts of their monthly income swept away by home loan repayments, in what’s being dubbed a ‘mortgage cyclone’.
Of those surveyed, 1 in 6 (17%) Australians report spending 40-60% of their monthly household income on their mortgage, while 5% of homeowners are paying more than 60%.
This figure is far and above what’s known as mortgage stress – spending more than 30% of your income to make repayments, which a shocking 39% of Australians are reportedly doing.
WATCH NOW: Mozo spokesperson, Rachel Wastell on ABC Breakfast talking about the mortgage cyclone
Mozo money expert Rachel Wastell says that the effect of twelve Reserve Bank of Australia (RBA) cash rate rises doesn’t come as a surprise and that people feeling the pressure of rising repayments should look towards refinancing.
“Spending half of a household’s monthly income on a home loan may seem staggering, however, the shift from the Covid-era of ‘free money lending’ and ultra-low rate loans to much higher rates in such a short space of time, means that this stress is not entirely surprising,” Wastell said.
“For borrowers struggling with rising repayments that are now devouring half their paychecks, it pays to call your lender and see if you can get a better deal.”
Of those surveyed, almost 1 in 3 (31%) admitted they had never refinanced, despite having a home loan for over a decade. This presents an opportunity for some borrowers to negotiate a better rate, especially if their Covid-era fixed rates are due to end.
The cost of falling off the fixed-rate cliff
As thousands of low fixed-rate home loans are due to come to an end in 2023, it’s important to understand how the significantly higher variable home loan rates will affect borrowers' pockets.
According to Mozo's analysis, switching from a fixed rate starting with a ‘2’, to one starting with a ‘6’, could equate to an extra $780 per month in mortgage repayments on a $350,000 loan over 25 years. For those with a $1,000,000 home loan over the same term, it could mean you’re spending an extra $2,229 each month.
The survey discovered that for 2 in 5 Australian homeowners, a rate change like that was already their reality, switching from a fixed rate starting with a 1 or 2, to a variable starting with a 5 or 6.
For some, however, the picture is worse.
The survey also found that a further 5% of Australian borrowers had switched from a fixed rate starting with a 1 or 2, to a variable rate of over 7% p.a.
That would mean borrowers with a $500,000 mortgage would have to find an extra $1,430 each month over a 25-year loan term, or $2,144 each month for borrowing $750,000.
According to the survey results, 37% of Australian borrowers say they’re struggling to find hundreds of dollars more each month to meet their new repayment obligations, with 1 in 6 now paying $1,000 more per month.
If your fixed rate is ending soon, calculate how much your repayments will change using Mozo’s fixed-rate ending calculator.
Calculators
Homeowners may see rates drop before their fixed-rate period ends
For the 23% of homeowners surveyed whose fixed rates aren’t ending this year, and haven’t felt the sting of the current variable rate environment, there may be some luck on the horizon, says Wastell.
“If the major banks are right, it looks like we’ll see rates drop late next year,” she said, “Westpac, ANZ and NAB are all betting on a rate cut from September onwards, and the latest cuts to one and two year fixed rate home loans across the market support this view.
“We’re also seeing cuts to variable rates, like NAB’s 96 basis point cut to its base variable rate home loan for those making principal and interest payments, and the growing number of home loans in the Mozo database starting with 5.”
Low-rate home loans starting with a ‘5’
These are some of the lowest rates in the Mozo database, as at 3 October 2023 for owner-occupiers with a loan-to-value ratio (LVR) of 80% or less. (This is based on principal and interest on a $400,000 loan):
- Homeloans360 Owner Variable Home Loan (Plus) | 5.54% p.a. (5.54% p.a. comparison rate*)
- Pacific Mortgage Group Standard Variable Home Loan | 5.54% p.a. (5.54% p.a. comparison rate*)
- Teachers Mutual Bank Your Way Basic Variable Home Loan | 5.64% p.a. (5.70% p.a. comparison rate*)
- Tic:Toc Variable Home Loan | 5.69% p.a. (5.70% p.a. comparison rate*)
- Reduce Home Loans Basic Home Loan | 5.69% p.a. (5.71% p.a. comparison rate*)
Explore more of your options by doing a home loan comparison with Mozo today, or check out some of the featured home loans on offer below.
Home loan comparisons on Mozo - last updated 2 December 2023
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2023
Unloan Variable
Owner Occupier, Refinance Only, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.74% p.a. variable5.65% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- interest rate
- 5.74% p.a. variable
- comparison rate
- 5.65% p.a.
- interest rate
- 5.74% p.a. variable
- comparison rate
- 5.65% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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Home Variable Rate
Owner Occupier, Principal & Interest, Refinance Only
interest rate
comparison rate
Initial monthly repayment6.15% p.a. variable6.15% 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.
CompareCompareHome Variable Rate
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.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.15% p.a.
- interest rate
- 6.15% p.a. variable
- comparison rate
- 6.15% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - up to $30,000
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Up Home Variable Rate
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Offset Home Loan
Package, Owner Occupier, LVR<60%, Principal & Interest
interest rate
comparison rate
Initial monthly repayment6.14% p.a. variable6.39% p.a.Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
CompareCompareOffset Home Loan
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.39% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.39% p.a.
- Upfront fees
- $350
- Ongoing fees
- $248.00 yearly
- Discharge Fee
- $400.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 60.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Offset Home Loan
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Flex Home Loan
Owner Occupier, Principal & Interest, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.19% p.a. variable6.43% p.a.Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.
CompareCompareFlex Home Loan
Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.
- interest rate
- 6.19% p.a. variable
- comparison rate
- 6.43% p.a.
- interest rate
- 6.19% p.a. variable
- comparison rate
- 6.43% p.a.
- Upfront fees
- $250
- Ongoing fees
- $250.00 yearly
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- -
- maximum borrowing amount
- -
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ubank Flex Home Loan
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Mozo experts choice awards won:
- Packaged Home Loan - 2023
Variable Rate Home Loan Special Offer
Package, Owner Occupier, Principal & Interest, LVR<80%
interest rate
comparison rate
Initial monthly repayment6.14% p.a. variable6.51% p.a.Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.
CompareCompareVariable Rate Home Loan Special Offer
Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.51% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.51% p.a.
- Upfront fees
- $0
- Ongoing fees
- $395.00 yearly
- Discharge Fee
- $350.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- -
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- $0 package fee for the first year.
Read our Mozo Review to learn more about the Credit Union SA Variable Rate Home Loan Special Offer
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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