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Finder personal finance expert Sarah Megginson.<\/p>\n
ANALYSIS<\/p>\n
Australians were thought to have largely escaped the dreaded \u2018mortgage cliff\u2019 when interest rates rose in 2022 and 2023.<\/p>\n
The savings accumulated when rates had been at historic lows in the years prior meant that many borrowers were years ahead on their mortgage repayments and could weather the storm as rates rose 13 times.<\/p>\n
Then, we breathed a sigh of relief when rates began to fall again in 2025. It was all over, we\u2019d made it.<\/p>\n
In 2026, it\u2019s a different story. Rates have risen twice and look set to be hiked again as inflation gets a second wind and global conflict and uncertainty threatens economies everywhere.<\/p>\n
And now, the mortgage cliff is back, looming large once again.<\/p>\n
A worrying new report by Finder has revealed 70 per cent of Australians have seen their finances plateau or decline over the past 12 months.<\/p>\n
MORE:Landlord evicts renter for sad reason<\/a><\/p>\n The survey showed 28 per cent had seen their situation actively deteriorate.<\/p>\n This time around, many borrowers will be without their safety buffers that helped them avoid falling off the previous mortgage cliff.<\/p>\n Finder personal finance expert Sarah Megginson said families have not had a chance to replenish their savings before heading into the current financial storm.<\/p>\n \u201cWhether it\u2019s a sudden rent hike or an emergency dental visit, even a single unplanned expense is enough to tip many households over the edge,\u201d Ms Megginson said. \u201cA renewed surge in inflation brings the very real threat of prolonged high interest rates, or worse, further hikes that could add hundreds to monthly mortgage payments.\u201d<\/p>\n Finder expert Sarah Megginson said households could be quickly tipped over the edge.<\/p>\n The research came hot on the heels of a separate Finder study that revealed 36 per cent of Aussie borrowers struggled to pay their mortgage in March, with 14 per cent admitting to missing at least one payment over the past six months.<\/p>\n Finder head of consumer research Graham Cooke said many of the hurdles borrowers face are out of their control.<\/p>\n MORE:Can\u2019t afford a home? It\u2019s your own fault<\/a><\/p>\n \u201cWe are seeing a unique geopolitical squeeze where the cost of living isn\u2019t just about the price of milk anymore. It\u2019s about international events, rising oil prices and potentially dramatically rising interest rates,\u201d Mr Cooke said.<\/p>\n Borrowers can prepare themselves for whatever comes next by looking at what is in their control and being proactive. <\/p>\n Know your number and stress test it<\/p>\n \u201cCheck your interest rate against the market leaders using a comparison site,\u201d Mr Cooke said. \u201cIf your rate doesn\u2019t start with a five, you\u2019re overpaying.\u201d<\/p>\n Once you\u2019ve taken stock, Canstar data insights director Sally Tindall suggests running your own economic stress test.<\/p>\n \u201cDon\u2019t wait for the RBA to hike rates again. Work out what your monthly repayments would rise to if there were another four cash rate hikes,\u201d Ms Tindall said. \u201cFor someone on a rate of 6 per cent today, that\u2019s stress-testing your mortgage at 7 per cent. While that level of rate pressure is, at this stage, unlikely, checking you can withstand this type of extreme scenario will give you comfort over what is likely to be a tough 12 to 18 months.\u201d<\/p>\n MORE:Homeowner reveals 10 cent trick to slash mortgage<\/a><\/p>\n Canstar Data Insights director Sally Tindall said to factor in another four rate hikes.<\/p>\n Put your offset to work<\/p>\n \u201cIn a high-rate environment, an offset account is key, because every dollar in it is a dollar less you get charged interest on; something the banks calculate every single day,\u201d Ms Tindall said. \u201cIf you can, put your salary straight into your offset \u2026 it essentially gives you a tax-free savings that\u2019s equivalent to your mortgage rate, but also serves as an emergency fund. Just make sure you\u2019re not paying a higher interest rate or excessive fees for the privilege of having the account because there are plenty of banks offering an offset on their lowest variable rate loan.\u201d<\/p>\n Put your bank on notice, then leave<\/p>\n It\u2019s likely there are better deals out there, so be familiar with them, Mr Cooke said.<\/p>\n \u201cCall your bank. Tell them you\u2019ve seen a better rate elsewhere and ask for a discharge form,\u201d he said. \u201cThis often triggers a transfer to the retention team who have the power to slash your rate on the spot. Even a 0.25 per cent reduction offsets the last cash rate hike.\u201d<\/p>\n If the bank won\u2019t budge, you\u2019ll need to take action.<\/p>\n<\/p>\n
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