3 out of 4 mortgagees don’t have a repayment buffer

26 April 2023

  • Markets are looking to today’s inflation number for their guess on a rise to 3.85% at the May RBA meeting
  • 25 basis point rate increase in May will add $92 to monthly repayments on a $600,000 mortgage, meaning that mortgage holders have paid an extra $14,196 in repayments since rate increases started in May 2022, than they otherwise would have done
  • Only 25 per cent of people with a mortgage are ahead
  • 22 per cent of those with a mortgage are behind or only making interest payments
  • The average variable interest rate is 6.13% and the lowest variable rate in the Mozo database is 4.95%
  • The household saving ratio has declined to the lowest level (4.5%) since September 2017

Wednesday 26 April: Worrying new research by comparison site Mozo shows that three quarters of those with a mortgage do not have a repayment buffer.

What is more, of those who are not ahead on their home loan repayments only around half are making capital and interest payments to make headway into their debt.

So it is not surprising that when Mozo asked them if they are scared of rates rises, 90 per cent of borrowers said a resounding YES!

Aggregate data and research by the Reserve Bank of Australia shows that even though the household savings rate has fallen to a six year low, as a nation we are well ahead on our savings and repayments. That is why the Reserve Bank and the regulator are relaxed that the banking sector isn’t going to come to any harm if rates go up a bit more.

For those of us who have a mortgage though, the reality of relentless interest rate rises is a lot more frightening. Mozo’s banking expert Peter Marshall said, “Our survey shows the human side of the numbers, there is a real divide between the haves and the have nots. And a massive majority are really scared right now.

“It has never been more important to shop around for your mortgage and big household expenses. We are seeing real competition in the mortgage market right now, including cuts to fixed home loan rates. 

“Doing some comparisons on, and using our calculators, could really help your monthly expenses and give you some peace of mind.”

When mortgage holders were asked by Mozo if they are ahead on their repayments they said:

No, I’m behind on on my repayments7%
No, I’m just paying the interest only each month at the moment17%
No, but I’m paying principal and interest each month on time52%
Yes, I have funds in a redraw facility or offset account25%

When asked by Mozo if they were fearful of rates increasing, borrowers said:

Yes, I am concerned about how much my mortgage repayments will increase46%
Yes, I am concerned but I will save and plan for the increase in my repayments22%
Yes, when my fixed period ends I am going to struggle to pay my mortgage11%
Yes, I will have to switch to interest-only repayments7%
Yes, I will have to seek hardship from my lender if they increase more or sell3%


Notes: Rates correct as at 24 April  2023. 

Media Contacts 

Vanessa Puli: 0416623377


Mozo compares more than 1,800 products from over 200 banking, insurance, energy, and broadband providers to help thousands of Australians find a better deal each month via its award-winning comparison tools and calculators. As one of the most visited comparison sites in Australia, our team of experts routinely provides financial commentary and advice for major news outlets in Australia. Mozo is part of Future plc, an international media group, and leading digital publisher.