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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
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
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
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?
| Response | Age: 18-29 | Age: 30-34 | Age: 35-39 | Age: 40-44 | Age: 45-49 | Age: 50-54 | Age: 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
| Response | NSW | VIC | QLD | SA | WAS |
|---|---|---|---|---|---|
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 home 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
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.
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
How much do you have in your mortgage offset account, your home loan redraw facility, or in a savings account?
| Response | All | Age: 18-29 | Age: 30-34 | Age: 35-39 | Age: 40-44 | Age 45-49 | Age: 50-54 | Age: 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
| Response | NSW | VIC | QLD | SA | WAS |
|---|---|---|---|---|---|
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% |