Rate anxiety affecting 75% of mortgagors

The study was conducted by finance platform MNY and included a panel of 1,000 Australians living in mortgaged homes.

According to the survey, roughly half of those polled said their anxiety levels have elevated due to rising mortgage rates, and 29 per cent said they have experienced mental health issues or sleeplessness due to the financial pressure of increasing housing costs. A small number of respondents also reported that their diet and ability to exercise have been impacted by tight budgets and that it is affecting their ability to perform at work.

The data also revealed that 8 per cent of mortgage holders believe their relationships with family have been worsened by these financial pressures, while 11 per cent said that tight spending had caused a strain in their relationships with their partner. Only one in four reported no adverse impacts as a result of increased mortgage payments.

MNY business analyst Sabina Khanusiak commented that the high levels of stress being caused by mortgage increases are due in part to the changing nature of housing in Australia, with borrowers taking out bigger loans to meet their housing needs.

“In 2021, when interest rates were at a record low, more than $305 billion was borrowed to buy or renovate homes in the first 10 months. These borrowers have significant financial strain if they are on, or are about to go on, variable-rate loans,” Ms Khanusiak said.

And she noted that while borrowers faced higher interest rates in previous decades, house prices and, consequently, loans were smaller.

“When we analysed the pool of respondents who were impacted, almost two-thirds – or 65 per cent – are living with increased stress and anxiety, suggesting that rate rises have given borrowers very little disposable income. It is impacting all areas of their lives, and it is becoming a social issue as much as a financial one,” Ms Khanusiak added.

She also pointed out that younger borrowers reported the highest levels of stress, likely due to being close to the start of their borrowing journeys, with less equity in their properties and having borrowed to their capacity.

In the 18- to 34-year-old age range, 83 per cent reported that their mental health or relationships have been affected as a result of rate hikes.

In comparison, 78 per cent of 35- to 54-year-olds and 67 per cent of over-55s reported negative impacts.

“The amount of stress that young Australians are facing due to the increase in interest rates is worrying, especially since many of them are new to borrowing. This current economic climate provides no encouragement or reason to buy property, leading to a rental crisis that is causing stress and anxiety for renters alike. These are uncertain times for Australians who are struggling to secure and retain a place to live,” Ms Khanusiak commented.

The research also showed that many feel that forecasts from the RBA, on which they base property-related decisions, have led to heightened stress because the central bank has ultimately changed course – such as when it signalled the cash rate would not need to rise until 2024.

As such, 75 per cent of borrowers said they would be wary of believing RBA forecasts in the future.

[RELATED: 1.5 million mortgagors ‘at risk’ of stress in July: Roy Morgan]