Australian borrowers are feeling the heat as interest rate hikes take a toll on household budgets.
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Mortgage holders have had to endure nine consecutive interest rate rises since May 2022, as the Reserve Bank Australia attempts to battle rising inflation.
But there appears to be no relief on the horizon, as the RBA is widely tipped to increase the cash rate by another 25 basis points on Tuesday.
According to a survey, 38 per cent of Australians will have to reduce their spending to afford rising repayments.
This is up 27 per cent from polling in August 2022.
The average borrower with a $500,000 loan and 30 years remaining, can expect to pay $1,051 more in monthly repayments compared to April last year if the expected rise goes ahead.
The survey by online financial broker Savvy also found 21 per cent of respondents hadn't fallen behind on their mortgage, but were under pressure to keep up repayments.
While 19 per cent of people said they would have to try and increase their incomes, this was up 4.5 per cent from 2022.
"With reports saying that consumer confidence has hit another near historic low last month, we can only hope that three per cent cohort who are missing repayments doesn't increase as time goes on."
- Savvy spokesperson Adrian Edlington
The months ahead look bleak for home owners doing it toughest.
1.7 per cent of people said they would try to downsize their homes.
While two per cent of respondents said they have missed repayments on their mortgage, and one per cent have missed multiple payments and were worried about losing their homes.
Two people surveyed said the bank foreclosed on their mortgage after they failed to keep up with repayments.
Savvy spokesperson Adrian Edlington said it was obvious people were struggling under the pressure of multiple rate rises.
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"People are willing to tighten belts and go without to prioritise the mortgage, which is exactly what the RBA wants to see but is a harsh reality for families doing it tough," he said.
"If rates continue to rise, scrimping and saving to fund the mortgage has an end point.
"With reports saying that consumer confidence has hit another near historic low last month, we can only hope that three per cent cohort who are missing repayments doesn't increase as time goes on."
The mortgage stress report by Savvy surveyed 1000 people with 21 per cent of respondents saying they owned their home outright and 22 per cent were renters.
