A Galaxy Research study has found that 7 out of 10 Australian households are experiencing mortgage stress in meeting their monthly home loan repayments, with 454,000 households reporting that they are struggling to make their repayments.
The study, commissioned by mortgage broker iSelect to assess the attitudes and behaviours of Australian mortgage holders, found that just 11 per cent of those with a mortgage switched providers or rates following the May 2016 rate cut.
Despite the RBA announcing another official rate cut this month (2 August 2016) to a new record low of 1.50 per cent, iSelect’s analysis suggests most mortgage holders are unlikely to take any action following the latest cut.
In total, 65 per cent of Australians did nothing with their home loans following the RBA’s rate drop in May. Of these, 30 per cent decided not to take any action because they felt it ‘would not be worth the effort’.
iSelect spokesperson Laura Crowden said that as a result many mortgage holders could be paying much more than they need to each month.
“While record-high property prices continue to put home buyers under stress when it comes to mortgage repayments, many home owners often underestimate the savings that could be gained by switching to a new loan with a lower interest rate.”
Ms Crowden said many mortgage holders are put off by exit fees, which are generally much lower than expected.
The iSelect survey found that the majority of households would need to save over $100 per month in order to be tempted to switch rates or lenders.
[Related: Mortgage stress more than doubles for FHBs]