Renters vs homeowners: COVID-19 struggles compared

author-avatar By
on October 21, 2020
Renters vs homeowners: COVID-19 struggles compared

Photo by Erol Ahmed on Unsplash

New research paints a stark contrast between how renters and homeowners coped financially during the COVID-19 pandemic.

The Consumers and COVID-19: from crisis to recovery report by the Consumer Policy Research Centre (CPRC) has found finds higher levels of financial stress among renters when compared to households with a mortgage. 

The results show 75% of renters are concerned about their financial wellbeing compared to 64% of mortgage holders.

Meanwhile, nearly half (49%) of renters expressed concerns about housing costs compared to nearly a third (31%) of mortgage holders. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

  • $5000 Cashback. T&Cs Apply.
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 29, 2022. View disclaimer.

According to CPRC, this exposes "deep cracks" in the Australian housing market. 

"In addition to the disproportionately high financial stress burdening renters, they have also not had the same freedom as homeowners to make their living arrangements more manageable under COVID-19 restrictions," the report said. 

"Adjustments such as renovating a space to make room for parents and children working from home, or welcoming a pet are privileges not afforded to most Australian renters.

"As governments turn efforts towards rebuilding our economy, a sustained focus on the things that will improve the wellbeing, trust and confidence of all Australian consumers needs to be front and centre.

"A home is a home, no matter whether you’re paying a mortgage, or the rent."

Who was more concerned about household bills? 

CPRC's report shows renters had higher levels of concern when it comes to household bills like energy, groceries and credit card bills. 

In total, 47% of renters were concerned about energy bills compared to 29% of homeowners, while the rate of concerns about groceries among renters was nearly double the rate for mortgage holders.    

Renters

Mortgage holders 

Concerns about energy bills

47%

29%

Concerns about groceries

40%

20%

Concerns about credit card bills

39%

29%

Source: CPRC

[Read: Rising energy costs a major concern for 96% of Australian households]

Who missed more repayments: Renters or homeowners? 

Renters again missed a greater proportion of payments across a variety of different sectors due to COVID-19, such as housing, credit, energy and telco. 

As many as 7% of renters missed some rent repayments, while 2% of mortgage holders missed mortgage repayments. 

While most banks offered customers mortgage deferrals for six months or more, renters were only offered an eviction moratorium, and still had to negotiate with their landlords for rent reductions

According to a survey by Better Renting, most who asked for a rent reduction were unsuccessful. 

Renters

Mortgage holders 

Missed housing repayments

7%

2%

Missed credit repayments

10%

3%

Missed energy repayments

9%

3%

Missed telco repayments 

7%

1%

Source: CPRC

CPRC's report supports this, with only 2% of renters saying they were offered payment assistance by their landlord, while 5% of mortgage holders were helped by their bank. 

A higher proportion of renters (16%) "had a negative experience when reaching out for payment assistance" with housing costs, compared to 9% of homeowners. 

Renters more likely to take on more credit during COVID-19

With renters having higher levels of concern about repaying credit compared to homeowners (39% vs 29%), it makes sense that renters also turned to credit and buy now, pay later (BNPL) more than their mortgage holder counterparts. 

According to the results, 37% of renters took on credit or buy now, pay later compared to 26% of homeowners, just to manage basic household expenses. 

Payday loans meanwhile were used by 4% of renters, and 0% of homeowners. 

Renters

Mortgage holders 

Took on credit cards/BNPL

37%

26%

Took on payday loans 

4%

0%

Source: CPRC

Renters dip into their savings, super more 

A sizeable 44% of renters and 28% of homeowners were forced to dip into their savings during the pandemic, while 15% of renters were forced to borrow money from family or friends compared to just 2% of homeowners.

Just under 20% of renters withdrew from their superannuation using the government's early super access scheme, which has now seen more than $33 billion withdrawn across the country

Only 8% of homeowners had to dip into their retirement fund. 

[Read: How to catch up if you've withdrawn your super early]

Renters

Mortgage holders 

Dipped into savings to meet ends meet

44%

28%

Accessed super early 

19%

8%

Borrowed money from family or friends 

15%

2%


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

Latest Articles

author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree
to the Savings Privacy Policy