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The non-major bank commissioned Dynata to conduct a survey of 1,000 respondents 18 years or older who currently hold a mortgage. The purpose of the survey was to understand the impact of the Reserve Bank’s rate hikes along with the perceptions of home owners in regard to refinancing.
The survey found that 69 per cent of home owners will be worried about meeting mortgage repayments should interest rates continue to rise, showing an increase of 5 percentage points when compared to October 2022.
However, 83 per cent of respondents said they had a savings buffer and access to savings to cover an extra month’s mortgage repayments.
Over two-thirds (71 per cent) said they have made changes to household budgets, most commonly reducing spending on groceries, entertainment, clothing, holidays, and gifts to mitigate the ongoing rate rises. This was up 58 per cent compared to October 2022.
Respondents under the age of 44 or with children noted the highest impacts with 79 per cent of these cohorts adjusting their household budgets while the national average was 71 per cent.
A further 54 per cent found alternative ways to supplement cash flows and income to bolster their savings buffers, with 74 per cent of these respondents confirming that these actions have helped improve their sense of financial wellbeing.
In addition, the non-major bank’s research found that 45 per cent of respondents were confident that their current rate was competitive and that almost half (49 per cent) were considering refinancing in the next 12 months.
Sixty-two per cent of respondents with a fixed rate component to their mortgage said they were already taking the steps to prepare for the looming mortgage cliff.
AMP Bank group executive Sean O'Malley said it’s no surprise that mortgagors are finding creative ways to improve household budgets, including finding ways to create savings buffers.
“While rising interest rates and higher costs of living are challenging, it’s a positive sign that Australians are taking action to improve their financial wellbeing,” Mr O'Malley added.
“Steps like reviewing cashflow, setting a budget and regularly shopping around for a more competitive interest rate offer are practical ways to help reduce financial stress.”
Spending on the decline
Bankwest released its findings from its Spend Trends report in mid-February that revealed that Western Australians were spending significantly less in the new year so far.
The report found that the number of customers transacting and the volume of transactions both fell month-on-month — with declines of 31 and 33 per cent — and year-on-year with falls of 24 and 16 per cent. However, the value of transactions grew in both cases (1 per cent and 25 per cent).
[RELATED: Aussies’ spending decline starts as fixed mortgage cliff nears]