Seven out of 10 Australian households are experiencing mortgage stress in meeting their monthly home loan repayments, new research has revealed.
But despite feeling under stress the Galaxy Research study, commissioned by iSelect, found that just over one in 10 of those have refinanced following the May 2016 rate cut.
In total, 65% of Australians did nothing with their home loans following the RBA
’s rate drop in May. And of these, 30% decided not to take any action because they felt it “would not be worth the effort”.
Laura Crowden, iSelect spokesperson, said this research suggests that most mortgage holders are unlikely to have taken any action following the latest cut in August, which bought the cash rate to a historically low 1.5%.
“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,” Crowden said.
The reason why many consumers believe it is “not worth the effort”, according to the research, is concern over the cost of mortgage exit fees.
The iSelect survey also found that the majority of households would need to save over $100 per month in order to be tempted to switch rates or lenders.
But while households may not be taking action with their lender, they are tightening the purse strings at home.
Seventy per cent reported cutting back on household expenditure in order to afford their monthly mortgage repayments, while a further 341,000 Australians have had to re-enter the workforce or shift from part-time to full time employment in order to service their home loan.