New research by AMP Bank has revealed 64% of homeowners are worried about meeting their mortgage repayments as interest rates continue to rise - currently sitting at 2.60%.

The online survey of more than 1,000 Australian mortgage holders found the impact is mostly being felt by younger homeowners who purchased a home in the last 12 months.

Seventy-four percent of those aged under 44 are feeling the toll of higher repayments.

APRA chairman Wayne Byres said first home buyers and those who took advantage of ultra-low fixed rates during Covid-19 were most at risk of mortgage stress.  

“There will be people who took advantage of the very low fixed rates on offer in 2020 in the midst of the pandemic – many of those were two and three-year fixed rate loans that over the next 12 months will need to be refinanced,” Mr Byres said.

“For those people, there will be a significant repayment shock as they have to refinance the fixed rates to higher rates.”

Mortgage stress is when a household is spending more than 30% of their gross (pre-tax) income on their mortgage repayments.

According to the RBA’s Financial Stability Review, one in four homeowners could fall into mortgage stress if interest rates continue to rise to 3.60% by the end of 2023. 

The RBA said those most vulnerable include first-home buyers, low income families, and overstretched borrowers.

The bank noted this figure could grow even higher if unemployment climbs and incomes do not.

New data by the Finance Brokers Association of Australia (FBAA) also revealed that individuals who have recently been through a marriage or relationship breakdown, will be the worst affected by rising interest rates.

See Also: The rise of 'mortgage prisoners' explained

Why refinancing isn’t at the top of the priority list

Despite experiencing financial pressure, nearly half (43%) of AMP's survey respondents said they are postponing refinancing their home loan due to complexity and time commitment.

“We know it’s a tough time for homeowners facing higher interest rates,” said Sean O’Malley, AMP Bank Group Executive.

“Australians are increasingly time poor so understandably refinancing a mortgage is not going to be top of the priority list, but with new digital technology it’s often a lot easier than what people expect.

“For some, refinancing their home loan might help to save money and improve overall financial wellbeing.”

Other reasons people hadn’t yet acted on refinancing included the perception that the financial benefits would be too small and uncertainty around when the best time to refinance is, given the changing interest rate environment.  

This is despite earlier research which suggested homeowners can save on average nearly $2,000 in the first year by refinancing.

Refinancing made easier with fast approval times

Launched to the public today, AMP Bank’s digital home loan in partnership with non-bank lender Nano enables applicants to obtain unconditional approval in as little as 10 minutes. 

“The digital mortgage, which launched today, makes the refinancing process simpler, and in most cases, a lot faster,” Mr O’Malley said.

“In the time many people spend commuting to work, it’s possible to apply and receive approval.

“With the growth of digital capability, applying for a home loan online has become quicker and easier than ever before.”

Nano claims it can unconditionally approve a home loan application in as little as 10 minutes.

AMP's digital home loan is initially for customers looking to refinance an existing home loan with another lender to the AMP Essential Home Loan. 

The offer will extend to new loans in 2023.


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

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
90%
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
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  • Unlimited additional repayments free of charge
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Important Information and Comparison Rate Warning

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. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. 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 . View disclaimer.

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