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Will Australians make changes to their home loans, repayments or living situations to cope with interest rate rises and a slow economy?

A Study June 2022

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. 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 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?

Half (51 per cent) 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 per cent will refinance before rates rise or get too high
  • A third (33 per cent) will also fix the rate on their whole loan amount
  • 25 per cent will fix the rate on part of their loan
  • Just 5 per cent of respondents will sell their home
  • 2 per cent plan to turn it into an investment property
  • 1 per cent will enlist a family member or rent out part of their home to help with mortgage repayments

The 49 per cent of respondents who will not act may have already refinanced or fixed their home loan interest rate.

Will Australians make changes to their home loan, repayments or living situation
What changes will Australian's make to their mortgages

Across the States and Territories

  • An equal 58 per cent of NSW and ACT mortgagors will make changes to cope with a rate rise
  • Followed by 56 per cent of Queenslanders and 49 per cent of Victorians
  • South Australians and WA residents were the least likely to make changes, at 38 per cent and 36 per cent respectively.
Mortgage holders, by state, who will act as rates rise's analysis of the pool of respondents who plan to make changes

Among this 51 per cent, 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 per cent of South Australians
  • 35 per cent of Queenslanders
  • 33 per cent of West Australians
  • An equal 31 per cent of NSW residents and Victorians.

In contrast, half the proportion of South Australians (24 per cent) will fix the rate on part of their loan.

More West Australians (31 per cent) than borrowers in other States will fix part of their loan.

A higher proportion of ACT mortgagors who will act (43 per cent) will refinance, compared with 28 per cent of West Australians and just 18 per cent of South Australians.

Selling their homes

West Australians are more likely to sell their homes, with

  • 8 per cent who said they will act indicating they will sell

Compared with:

  • No respondents from the ACT chose this response
  • 6 per cent of South Australians
  • 4 per cent of NSW residents will sell their home
WA solar rebates and energy discounts

And what are the age based trends? 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 per cent.

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.

Over 50s

Younger Australians

A greater proportion of younger respondents revealed they would be making changes to their home loan, with

  • more than three-quarters (77 per cent) of 18-34-year-olds selecting one of the options provided to restructure their loan
  • compared with 55 per cent of 35-49-year-olds and 31 per cent 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 per cent) of 18-50-year-olds who will make changes revealed they will refinance to cope with a rate rise, compared with 28 per cent of over-50s.

Millenial age group
How the 51% of respondents, by age will act as interest rates rise


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