Recent research indicates that numerous mortgage holders continue to face financial difficulties, with calls for additional interest rate reductions. Following the Reserve Bank of Australia’s (RBA) decision to lower rates by 25 basis points, a survey conducted by Finder revealed that this adjustment is insufficient for approximately 60% of homeowners.
Out of 1,027 survey respondents, which included 297 mortgage holders, 60% believe the cash rate of 3.85% still needs to decrease further. This represents nearly two million individuals grappling with affordability issues, even after two rate cuts since February.
For most homeowners to find their mortgage repayments manageable, the cash rate is estimated to need an additional drop to 3.35%. Despite the recent decrease, half of the borrowers still require at least two more cuts to comfortably manage their repayments. Alarmingly, about 17% of respondents—around 561,000 mortgage holders—would need five or more rate reductions to ease their financial burden.
Finder’s money expert, Rebecca Pike, highlighted that many Australians are heavily relying on multiple rate cuts to alleviate their financial strain, warning that without substantial reductions from the RBA, many could face severe economic challenges by the start of the new year. Furthermore, many borrowers have exhausted their emergency savings by either topping up their mortgage or managing the rising costs of living.
The survey findings also indicate a significant disparity between genders regarding the need for rate reductions, with 65% of women reporting a requirement for reduced rates to afford their mortgages, compared to 54% of men. Pike suggests that in light of the lower cash rate, mortgage holders should consider switching lenders to help lessen the financial pressure.
In summary, while the RBA’s recent rate cut offers some relief, it appears inadequate for a substantial number of mortgage holders, who necessitate further reductions to achieve stable and affordable repayments.