Westpac says more Aussies are missing mortgage repayments: here’s how to avoid their mistakes

By Katherine O'Chee ·

Westpac has found more Aussies are now struggling to meet their home loan repayments, despite positives in the air like lower interest rates and a recovering housing market. 

While overall bad debt levels continue to be very low, the proportion of mortgages that are more than three months overdue has risen since the March quarter, from 0.82% to 0.9% this quarter. The number of residential properties Westpac repossessed has also increased from 482 to 550. 

This follows reports from two other big banks, ANZ and NAB, which similarly noted mortgage arrears or missed repayments during the June quarter have been creeping up. 

Westpac said higher rates of arrears and home repossessions reflect a weaker property market.

RELATED ARTICLE: Mortgage stress puts financial stress on Aussie households: ME Bank

According to Mozo’s property expert Steve Jovcevski, a tougher than usual job market and slowing income growth are possible culprits behind more missed repayments.

“While costs of living are increasing, people’s wages are not, and that’s putting a strain on Aussies trying to meet their home loan repayments,” Jovcevski said. 

So for those digging deep into their pockets every month to pay off their loan, Jovcevski recommended shopping around for other offers in the market. By snagging a new, low rate home loan, borrowers can reduce their monthly repayments considerably.

“A lot of people just stick with the big banks and don’t look around,” he said. “Mortgage repayments are going down, but the problem is, cheaper home loan rates seem to be reserved for new borrowers and current customers are missing out on better deals because of that.” 

Top tips for refinancing to a better home loan deal 

Refinancing your mortgage could see hundreds of dollars trimmed off your monthly repayments. 

Even a 1% interest rate difference matters - if you took out a $500,000 loan over 30 years at 3% instead of 4%, you could expect to repay $279 less per month and $100,461 less in total interest over the life of the loan.* 

Not convinced? Punch in the numbers into our Switch and Save calculator to see just how much you could save by refinancing your mortgage. 

Read on for three quick tips to get you started today: 

1. Keep up your repayments for six months

Make sure you haven’t missed any repayments for at least six months before refinancing, as otherwise you can wave goodbye to any hope of getting that tick of approval next to your new home loan. 

Skipped on a repayment? Not the end of the world! Jovcevski recommended “sticking where you are, getting yourself six months clear of repayment history and then applying.” 

2. Pick the right time 

Relationships and home loans have one thing in common: you’ve got to get the timing right! 

Let’s say you’re working full-time at a company, but you’re going on maternity leave or moving onto freelancing soon. Consider refinancing before you leave your current role because, as Jovcevski puts it, “the more income and the more stability you have, the more comfortable the lender will be.” 

3. Talk to the lender before applying

Think you’ve found the perfect new home loan? You might be tempted to put in your application straight away. But Jovcevski recommended speaking to the lender first and getting an idea of whether you can service the loan.  

“That’s because any official inquiry you make with a lender, whether you are or aren’t approved, is a black mark on your credit history,” he said. “Making too many inquiries to too many lenders will actually reduce your credit score, which can in turn affect you getting a home loan or refinancing.” 

Ready to look for a killer new home loan? Read our article on how to refinance to a better home loan deal, or head over to our refinance home loan comparison table to find a deal that suits you.

Compare refinance home loans - page last updated October 20, 2020

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.

I want to borrow

years

  • 2.54% p.a. variable

    2.81% p.a.

      Compare
    Details
  • mozo-experts-choice-2020

    2.48% p.a. variable

    2.50% p.a.

      Compare
    Details
  • mozo-experts-choice-2020

    2.09% p.a.
    fixed 2 years

    2.98% p.a.

      Compare
    Details
  • mozo-experts-choice-2020

    2.34% p.a. variable

    2.34% p.a.

      Compare
    Details
  • mozo-experts-choice-2020

    2.29% p.a. variable

    2.32% p.a.

      Compare
    Details
Picture of Steve Jovcevski

Talk to a Mozo home loans expert

Buying your first home, refinancing your existing home or thinking of investing? Speak to Steve, our home loans expert today!

*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.

*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, loan amount and term entered. 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 Loans 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.

Katherine O'Chee
Katherine O'Chee
Money writer

Katherine O’Chee is Mozo’s international money transfer and forex expert and business banking writer. She keeps Mozo’s readers on top of the latest news and writes in-depth features to inform and help Australians make smarter financial decisions. Her work has been published in major media outlets including Sydney Morning Herald, SBS News and Bangkok Post. She has a Bachelor of Arts (Media and Communications) from the University of Sydney.