The mortgage cyclone ripping through household budgets

By Jack Dona · · 4 min read
Fact Checked
Advertiser disclosure
A young family sit in the yard of their home, the mother embraces the son.

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

Crunch the numbers with our range of free calculators covering all areas of finance. See all

Rate change calculator icon Home loan rate change calculator Borrowing calculator icon Home loan borrowing calculator Repayment calculator icon Mortgage repayment calculator Stamp duty calculator icon Stamp duty calculator Budget calculator icon Budget calculator See all calculators icon See all 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

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can compare more home loans here.
Last updated 27 July 2024 Important disclosures and comparison rate warning*

Promoted

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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 online in minutes.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    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.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Optimum Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Lock in a competitive interest rate and enjoy peace of mind for the fixed period. Available for owner occupied new and refinanced home loans with at least 20% deposit. Split option available as well as offset and redraw. Noapplication, ongoing or banking fees. Third Party fees may be applicable - payable within loan repayments. Extra repayments up to $20K per annum permitted. Apply online, 100% member owned credit union.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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 online in minutes.

  • OMG Home Loan

    • Owner Occupier
    • Principal & Interest
    • <60% LVR
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

  • Flex Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    5.99 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

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

  • Express Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <90%
    Interest rate
    6.01 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,001
    Go to site

    Get 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.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    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.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Flex Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.38 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

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

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.54 % p.a.
    Fixed 2 years
    Comparison rate
    7.10 % p.a.
    Initial monthly repayment
    $3,174

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

Learn more

* 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

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Compare home loans