According to research from comparison website Finder, which involved a survey of 1,023 Australians, approximately 15 per cent of Australians are struggling to meet their home loan or rental commitments.
Of those under stress, over 40 per cent have sought or plan to seek mortgage relief from their lender.
The Finder survey found that younger Australians were disproportionately burdened by their commitments, with 26 per cent seeking or planning on seeking assistance from their lender or landlord, compared with 10 per cent of Gen X respondents and 1 per cent of Baby Boomers.
The latest figures from the Australian Banking Association (ABA) revealed that approximately 320,000 mortgage customers have opted to defer loan repayments for up to six months since the onset of the COVID-19 crisis.
However, Finder noted that borrows that opt to defer their loan repayments would pay thousands in capitalised interest over a shorter loan term.
According to a Finder analysis, a borrower 10 years in on a $500,000 loan with an average variable rate of 3.90 per cent could be charged an additional $11,127 over the remaining 20 years of their loan term if they defer repayments for six months.
Kate Browne, personal finance analyst at Finder, observed: “While a mortgage deferral or holiday sounds appealing in the short term, [borrowers] need to seriously consider whether [they’ll] be able to afford this ‘holiday’ in the long run.”
Ms Browne said borrowers should consider refinancing as an alternative to a repayment holiday.
“Refinancing your mortgage could save [borrowers] enough to avoid having to pause [their] payments,” she said.
“COVID-19 has hit the economy hard, but the silver lining is that home loan interest rates have never been lower.”
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