Higher interest rates and falling property prices are putting households under pressure, but most mortgage holders remain in a relatively strong financial position.
That’s the encouraging finding from the latest Financial Stability Review from the Reserve Bank of Australia (RBA).
Despite this year’s challenges, the RBA estimates:
- Less than 1% of borrowers owe more on their mortgage than their property is worth.
- Around 2% of variable-rate owner-occupier borrowers don’t have enough income to cover mortgage repayments and essential expenses.
- Most borrowers in that 2% group have savings that could cover their shortfall for at least six months, provided they reduced spending to essentials.
Your position matters more than the averages
These figures suggest most borrowers have some protection against financial setbacks, thanks partly to savings buffers and earlier property price growth.
But national averages don’t tell you how resilient your own finances are.
It’s worth considering how your household would cope with another repayment increase, an unexpected expense or a temporary loss of income.
If you’re unsure how your finances would cope with another rate rise or unexpected expense, a home loan review could help you understand your position and identify opportunities to create more breathing room.
