Money Research with Money Matchmaker®

Do Australians have a financial buffer in their home loan to cope with a rate rise?

A Money.com.au Study April 2022

About the study

Money.com.au commissioned a survey of an independent panel of 1018 Australian mortgage holders to gauge how financially prepared Australians are for a new environment of higher interest rates and the rising cost of living.

Respondents were asked to specify how much money they have in their mortgage offset account, home loan redraw facility or savings account, to determine whether they have a substantial financial buffer to navigate increasing costs.

Money.com.au also asked respondents what interest rate rise they could cope with to continue servicing their loan.

The pool of survey respondents matches the geographical spread of the Australian population.

What proportion of Australians have an effective financial buffer in their home loan?

Most respondents (80 per cent) revealed they have a buffer in their home loans to meet upcoming interest rate rises.

Specifically:

  • 28 per cent have more than $50,000 in a mortgage offset account, home loan redraw facility or savings account
  • 42 per cent have a buffer of more than $20,000
  • 14 per cent have a buffer of more than $100,000.
  • Twenty (20) per cent said they have no buffer at all
Home Loan Buffer Study Results Graph

Who is likely to not have a buffer?

The survey also revealed that the older the borrower, the more likely they are to have no buffer:

  • 28 per cent of over-50s

Compared with:

  • 24 per cent of 35-49-year-olds
  • 9 per cent of 18-34-year-olds
Over 50s

What state has the largest buffer?

When comparing the States, Money.com.au found that Victorians were more likely to have the largest savings buffer against their home loan.

  • Half (51 per cent) of Victorians revealed they have a buffer of more than $20,000.

Compared with:

  • 31 per cent of Queenslanders
  • 25 per cent of South Australians
Energy in VIC with Money Matchmaker

In addition more Victorians are also holding more than $50,000 in an offset, redraw or savings account.

  • A third (28 per cent) of Victorians revealed they have a financial buffer of $50,000 or more

Compared with:

  • 25 per cent of WA residents
  • 17 per cent of South Australians

How much do you have in your mortgage offset account, your home loan redraw facility, or in a savings account?

ResponseAge: 18-29Age: 30-34Age: 35-39Age: 40-44Age: 45-49Age: 50-54Age: 55+

Nil

12%

3%

27%

21%

25%

40%

22%

Less than $5000

14%

21%

14%

14%

17%

15%

21%

$5000-$10,000

17%

4%

10%

14%

6%

7%

11%

$10,000-$20,000

14%

13%

8%

9%

12%

10%

11%

$20,000-$50,000

19%

17%

12%

15%

13%

5%

11%

$50,000-$80,000

10%

16%

12%

8%

6%

3%

10%

$80,000-$100,000

5%

8%

4%

5%

3%

4%

2%

$100,000-$200,000

4%

11%

9%

6%

11%

5%

5%

More than $200,000

5%

7%

5%

7%

6%

11%

8%

And by State

ResponseNSWVICQLDSAWAS

Nil

20%

15%

24%

32%

19%

Less than $5000

13%

15%

22%

22%

17%

$5000-$10,000

11%

11%

11%

10%

11%

$10,000-$20,000

13%

10%

11%

9%

12%

$20,000-$50,000

15%

14%

12%

8%

16%

$50,000-$80,000

10%

12%

5%

10%

10%

$80,000-$100,000

4%

6%

5%

2%

2%

$100,000-$200,000

7%

11%

4%

2%

3%

More than $200,000

7%

8%

5%

3%

10%

Can their financial buffer help borrowers cope with interest rate rises?

The majority of respondents (84 per cent) revealed they would still be able to make loan repayments with an interest rate rise.

Specifically:

  • 63 per cent said they can meet repayments with a 0.5 per cent rise or more
  • 42 per cent with at least a 0.75 per cent rise
  • 34 per cent with rises of 2 per cent or more
  • 16 per cent said they would not be able to make loan repayments with any kind of rate rise

The results also revealed that the older the borrower age group, the more likely they are to find repayments easier in a climate of rising rates:

  • 47 per cent of over 55s said they can make repayments if rates rise by 2 per cent or more

Compared with:

  • 31 per cent of 40-54-year-olds
  • 29 per cent of 25-39-year-olds

How do the age groups compare with coping with rises?

Younger Australians revealed they could cope with a 0.5 per cent rate rise, at 30 per cent (chosen by respondents aged 18-24),

Compared with:

  • 17 per cent of 25-34-year-olds
  • 16 per cent of 35-44-year-olds
  • 11 per cent of 45-54-year-olds
  • 10 per cent of over-55s
Millenial age group

But Older Australians

More older Australians could cope with a rate rise of 1 per cent or more, at 50 per cent (chosen by respondents aged over-50).

In contrast with the following age groups who said the same:

  • 31 per cent of 18-34-year-olds
  • 40 per cent of 35-49-year-olds.
Middle Aged Australians

Which state can handle the biggest rise?

A larger proportion of Queensland borrowers said they can meet repayments with a high rate rise:

  • 37 per cent of Queenslanders can cope with a rate rise of 2 per cent or more

Compared with:

  • 31 per cent of NSW residents
  • 28 per cent of South Australians
Energy in QLD with Money Matchmaker

How much do you have in your mortgage offset account, your home loan redraw facility, or in a savings account?

ResponseAllAge: 18-29Age: 30-34Age: 35-39Age: 40-44Age 45-49Age: 50-54Age: 55+

I won’t be able to make loan repayments with any kind of interest rate rise

16%

14%

11%

22%

20%

15%

29%

14%

I could still make loan repayments with a 0.25% rate rise

22%

29%

22%

22%

19%

24%

20%

18%

I could still make loan repayments with a 0.5% rate rise

14%

24%

15%

13%

18%

10%

11%

10%

I could still make loan repayments with a 0.75% rate rise

6%

8%

9%

6%

9%

2%

4%

3%

I could still make loan repayments with a 1% rate rise

9%

9%

12%

6%

8%

11%

6%

9%

I could still make loan repayments with a 2% rate rise

8%

6%

8%

9%

8%

7%

3%

9%

I could still make loan repayments with more than a 2% rate rise

26%

9%

23%

23%

18%

31%

27%

37%

And by State

ResponseNSWVICQLDSAWAS

I won’t be able to make loan repayments with any kind of interest rate rise

14%

15%

18%

17%

18%

I could still make loan repayments with a 0.25% rate rise

24%

19%

20%

26%

20%

I could still make loan repayments with a 0.5% rate rise

17%

13%

11%

14%

11%

I could still make loan repayments with a 0.75% rate rise

5%

6%

5%

6%

8%

I could still make loan repayments with a 1% rate rise

9%

12%

9%

8%

9%

I could still make loan repayments with a 2% rate rise

10%

6%

7%

10%

5%

I could still make loan repayments with more than a 2% rate rise

21%

29%

30%

18%

29%

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