VIC pain pockets: Fears rate hike could deepen landlord exodus<\/a><\/p>\nFor comparison, the average borrowing household across Australia was revealed to have personal debts totalling $320,000, against an average income of about $120,000 a year.<\/p>\n
This included an average of about $26,000 in consumer loans, such as car loans, and about $7400 in credit card or buy now pay later debt. The rest was usually home loan or investment debt.<\/p>\n
![\"RBA](\"data:image\/svg+xml,%3Csvg)
<\/p>\n
RBA governor Michele Bullock is expected to announce a rate hike next week. Picture: NewsWire \/ Nikki Short<\/p>\n
Experts warned that Tuesday\u2019s potential cash rate rise could be the final blow for families already resorting to refinancing their homes to pay for groceries.<\/p>\n
Martin North, head of research at Digital Finance Analytics, warned that while averages might looked manageable, they masked a disastrous reality for a large segment of the population.<\/p>\n
\u201cThere is a segment of the population who are already cashflow negative, and for them, small rate rises will be disastrous and potentially a tipping point,\u201d Mr North said. <\/p>\n
He described the current debt burden as a \u201cnoose\u201d around the necks of struggling families that \u201ctightens over time, and as rates rise\u201d.<\/p>\n
<\/p>\n
Digital Finance Analytics director Martin North said debt levels were a reflection of a spending culture. Picture: Hollie Adams<\/p>\n
\u201cBanks do help, on hardship grounds they must, but will often extend and pretend, which keeps borrowers off default lists but disguises the true state of many households,\u201d Mr North said.<\/p>\n
The Illusion of Wealth<\/p>\n
The investigation highlights a dangerous trend of \u201crisky refinancing,\u201d where homeowners consolidate short-term debts, like car loans and credit cards, into their 30-year mortgages.<\/p>\n
Sarah Megginson, personal finance expert at Finder, warned that rising property values have created a trap where Australians feel wealthier than they are.<\/p>\n
\u201cProperties have surged in value over the last decade, and as a result many Australians are asset rich but cash poor,\u201d Ms Megginson said. She cautioned against \u201crisky\u201d refinancing used to absorb lifestyle spending.<\/p>\n
<\/p>\n
Personal finance expert and mum of three Sarah Megginson. Picture: Michelle Swan.<\/p>\n
\u201cYour debts feel easier to manage when they\u2019re combined into one monthly payment, but your risk quietly increases,\u201d she said. <\/p>\n
\u201cIf you add a 5-year personal loan to a 30-year mortgage \u2026 if things go wrong, it\u2019s now your house on the line, not just your lifestyle spending\u201d.<\/p>\n
\u201cGateway Drug\u201d to insolvency<\/p>\n
Beyond mortgages, the explosion in unsecured debt is staggering. The average borrowing household now carries about $24,000 in consumer loans and nearly $7400 in unsecured debts like credit cards and Buy Now Pay Later (BNPL) schemes.<\/p>\n
<\/p>\n
Compare the Market economic director David Koch. CTM Jono Searle<\/p>\n
Compare the Market economic director and former Sunrise host David Koch said credit card usage has surged, with 50 per cent of respondents in a 2025 Compare the Market poll reporting credit card debt.<\/p>\n
This was a massive jump of nine percentage points from the previous year.<\/p>\n
\u201cThings like credit cards and personal loans create a bit of an illusion that we can afford things that we really can\u2019t, and that can get some people into a lot of trouble,\u201d Mr Koch said.<\/p>\n
Ms Megginson said those accessing BNPL schemes needed to be more aware of what they were getting into.<\/p>\n
\u201cBuy Now, Pay Later is a gateway drug into bigger debts and deeper financial struggles,\u201d she said, noting that BNPL services are now present in nearly 50 per cent of all new insolvency cases. <\/p>\n
<\/p>\n
High debts will leave many households dangerously exposed if there is another rate hike.<\/p>\n
\u201cIt\u2019s training people to spend money they don\u2019t have on things they don\u2019t need\u201d.<\/p>\n
Mr North attributed the skyrocketing debt to a cultural shift toward \u201cinstant gratification\u201d and a \u201cneed it now philosophy\u201d driven by social media and heavy marketing.<\/p>\n
If you are experiencing financial difficulty, contact the National Debt Helpline on 1800 007 007<\/p>\n","protected":false},"excerpt":{"rendered":"Treasurer Jim Chalmers has come under fire after Labor declared in 2025 that inflation was under control, only…\n","protected":false},"author":2,"featured_media":449141,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":{"0":"post-449140","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/449140","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=449140"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/449140\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/449141"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=449140"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=449140"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=449140"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}