Recent data shows that four out of five borrowers have tightened their budgets to manage home loan repayments amidst high interest rates. According to the latest Mortgage Choice Home Loan Report (June 2024), over half of the surveyed customers have cut back on dining out and entertainment, such as cinema and concert outings. Consequently, homeowners face increased mortgage repayments, adding up to hundreds or thousands of dollars each month.
To meet their home loan obligations, borrowers have adopted various spending cuts, including postponing or canceling holidays and subscription services. Nearly one in five borrowers has taken on extra work or side jobs for additional income. Additionally, 20% of borrowers have dipped into their savings, and 7% have sought financial assistance from family due to a lack of emergency funds.
Refinancing activity has declined by almost 26% compared to the previous March quarter, attributed to the passing peak of inflation, stable cash rates, and prior refinancing by most homeowners. Since May 2022, interest rates have risen 13 times, significantly increasing home loan repayments and straining homeowners’ budgets.
Despite ongoing struggles, optimism among potential buyers is growing, with 70% now believing it is a good time to buy, up from 59% in May 2023. This sentiment is evident in the latest Mortgage Choice home loan application data, which shows a 17.5% increase in purchase submissions compared to the previous March quarter, alongside a 9% rise in the average loan size nationally.
Borrowers will continue to face financial challenges until interest rates decrease, although predictions on the timing of the first rate cut vary. However, rising confidence among potential buyers indicates favorable market conditions, potentially boosting demand through the remainder of the year, particularly leading up to the spring selling season.
Disclaimer: The information provided in this article is based on general data and is not intended as financial advice. Readers should seek professional advice tailored to their individual circumstances.
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