About the study
Recent Reserve Bank of Australia (RBA) rate increases have had a major impact on the rates charged and paid to Australians on products like home loans and savings accounts.
Money commissioned a survey of an independent panel of 1,018 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 whether they would restructure their home loan in any way and how they plan to do so, including fixing the rate on their loan, refinancing, renting out their home or even selling their home.
The pool of survey respondents matches the geographical spread of the Australian population.
What proportion of Australians will make changes to cope with a rate rise and a slow economy?
51% of respondents said that they would make changes to their home loan to cope with a rate rise.
Among those who will make changes:
- 33% will refinance before rates rise or get too high
- A third (33%) will also fix the rate on their whole loan amount
- 25% will fix the rate on part of their loan
- Just 5% of respondents will sell their home
- 2% plan to turn it into an investment property
- 1% will enlist a family member or rent out part of their home to help with mortgage repayments
The 49% of respondents who will not act may have already refinanced or fixed their home loan interest rate.
Across the states and territories
- An equal 58% of NSW and ACT mortgagors will make changes to cope with a rate rise
- Followed by 56% of Queenslanders and 49% of Victorians
- South Australians and WA residents were the least likely to make changes, at 38% and 36% respectively
Money's analysis of the pool of respondents who plan to make changes
Among this 51%, a higher proportion of mortgage holders in each state will fix the interest rate on their whole loan amount, rather than part of their loans. Specifically:
48% of South Australians
35% of Queenslanders
33% of Western Australians
31% of NSW residents and Victorians
In contrast, half the proportion of South Australians will fix the rate on part of their loan.
More West Australians (31%) than borrowers in other states will fix part of their loan.
A higher proportion of ACT mortgagors who will act (43%) will refinance, compared with 28% of West Australians and just 18% of South Australians.
Selling their homes
West Australians are more likely to sell their homes, with
- 8% who said they will act indicating they will sell
Compared with:
- No respondents from the ACT chose this response
- 6% of South Australians
- 4% of NSW residents will sell their home
And what are the age based trends?
Money also looked for age-based trends. It found that a higher proportion of over-50s will not be making changes to cope with a rate rise, at 69%.
This suggests older Australians already have substantial saving buffers to keep up with higher loan repayments.
They may also be more financially savvy, making changes to their home loans earlier in the year in anticipation of a rate rise, while other older Australians may be close to paying off their entire loans altogether.
Younger Australians
A greater proportion of younger respondents revealed they would be making changes to their home loan, with
- More than three-quarters (77%) of 18-34-year-olds selecting one of the options provided to restructure their loan
- Compared with 55% of 35-49-year-olds and 31% over-50s.
Younger Australians are more likely to have longer-term loans and higher repayments to contend with than with their older counterparts.
A third (34%) of 18-50-year-olds who will make changes revealed they will refinance to cope with a rate rise, compared with 28% of over-50s.
