When mortgage stress strikes, here’s what to do about it

A series of RBA hikes has added more than $1000 to monthly bills for a typical $500,000, 25-year home loan since May 2022, leaving many people on the brink of mortgage stress.

And it’s about to get a whole lot worse for many, with an oft-cited fixed rate mortgage cliff now upon us, threatening to throw hundreds of thousands more people onto higher repayments.

CoreLogic research chief Eliza Owen says about 880,000 fixed rate loans will expire this year and 440,000 next year – moving people off  the COVID-19 era’s record low rates.

She said a household with a $550,000, 30-year loan could see repayments jump from $2017 a month to $3175 – a 60 per cent increase.

“Average fixed rates with terms of three years or less bottomed out at 1.95 per cent in May 2021 for owner occupiers, while average variable rates for new owner occupier borrowers are now 5.66 per cent,” Ms Owen said.

But how do you tell whether such increases in your monthly bills will land you in mortgage stress?

And what should you do if you are struggling to keep up with higher repayments?

Are you in mortgage stress?

More than a million Australians are estimated to be at risk of mortgage stress right now, according to the latest Roy Morgan figures, so if you are struggling you aren’t alone.