Housing headache: 35% of homeowners struggle to pay their mortgage

Escalating mortgage rates have made life tough for millions of Australians, according to new research by Finder.

More than 1 in 3 Aussie mortgage holders (35%) – equivalent to 1.1 million households – say they are struggling to pay their home loan in January.

The percentage of those struggling to pay is down from a record high of 41% in June last year, but up from 24% in January 2022.

Richard Whitten, home loans expert at Finder, said many homeowners were struggling to stay on top of their finances.

"Millions of Aussie borrowers are experiencing financial stress due to the fact that their monthly mortgage repayments have blown out so rapidly.

"The start of the year is a great time to assess where you might be able to save. Your home loan is the best place to start, as it's likely your biggest expense."

Finder reveals home loan winners

Whitten said it was crucial that Australians pick a home loan that would give them the best deal.

"We've just announced the winners of the Finder Home Loans Awards 2024. These are given to the best home loan products on the market.

"Our experts analysed 12 months' worth of interest rate and fee data to find the best solutions for most types of borrower.

"We did the hard yards and looked at more than 3,000 home loans from more than 200 lenders – so you don't have to."

This year saw online lender Easy Street take the top spot for Home Loan Provider of the Year. Many of its loans offer competitive rates and low fees, putting it ahead of some lenders that won many individual home loan awards.

Tiimely (formerly Tic:Toc) cleaned up again this year, winning 3 of the 14 categories including Owner Occupier Variable Home Loan, First Home Buyer Home Loan and Owner Occupier Refinance Variable Home Loan.

BCU came out on top for Owner Occupier Fixed Home Loan - 1 year and Investor Fixed IO Home Loan - 1 year.

Australian Mutual Bank was awarded top gong for Owner Occupier Fixed Home Loan - 2 year while The Capricornian won Owner Occupier Fixed Home Loan - 3 year.

Pacific Mortgage Group scooped up Owner Occupier Refinance Fixed.

Other winners include Bendigo Bank for Investor P&I Variable Home Loan and G&C Mutual Bank for Investor IO Variable Home Loan.

Greater Bank picked up 2 wins, for Investor Fixed IO Home Loan - 2 year and Investor IO Fixed Home Loan - 3 year.

Westpac came out on top for Big Four Home Loans Provider of the Year.

Worrying trend from refinancers

Aussie mortgage holders facing dramatically higher costs are stretching their mortgage term in order to bring down monthly repayments, according to new research by Finder.

A worrying 18% of refinancers extended the length of their home loan when they refinanced.

The average refinancer added 3.5 years back onto their loan when they switched banks.

Whitten said in the current climate it was better to refinance sooner rather than later.

"A common reason customers look to refinance is to reduce their repayments, often by extending their loan term back to 30 years.

"Mortgage holders are looking to free up some spare cash, but it could be a much more expensive option long term."

Whitten urged homeowners to tread carefully when refinancing.

"Review your existing home loan to make sure you're not paying more than you need to – and pay attention to what your lender is offering new customers.

"Try to negotiate it down with your current lender, but also remember to look at what rates other lenders offer because you may find a better deal.

"There's still plenty of competition in the market. Finder's Home Loans Awards 2024 saw Tiimely score top gong for Owner Occupier Refinance Variable.

"You can try to stick to your original loan's term if you do decide to refinance so it doesn't reset the clock.

"Or you can start a new 30-year term but focus on keeping your repayments higher than the required monthly repayment. Your aim should be to pay off the new home loan faster either with extra repayments or better yet by building up your offset account."