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Real Money, a free weekly newsletter giving expert tips on how to save, invest and make the most of your money, is sent every Sunday. You\u2019re reading an excerpt \u2013 you can sign up to get the whole newsletter in your inbox<\/a>.<\/p>\n If you\u2019re a homeowner, as two-thirds of Australians are, you\u2019re probably not enjoying headlines featuring words like \u201cfalls\u201d, \u201ctumbles\u201d and even \u201ccrash coming\u201d. They hardly make you feel relaxed and comfortable.<\/p>\n So, let\u2019s get into what is really happening and what a falling property market<\/a> means when you are already invested.<\/p>\n The sweeping changes to negative gearing and capital gains tax are designed, really, to correct the housing market. Good if you\u2019re an aspiring buyer but not so much if you\u2019ve already bought \u2026 and particularly recently<\/a>.<\/p>\n Related Article The latest PropTrack Home Price Index Report<\/a> shows the market has fallen for five straight months \u2026 a 0.2 per cent retraction in August brings the pull back to 2.7 per cent below the March 2026 peak.<\/p>\n The budget announcing the tax changes was on May 12.<\/p>\n Meanwhile, the growth forecasts are sobering. At least they are for the next couple of years.<\/p>\n So what to do if you\u2019re a homeowner?<\/p>\n What you can do about it<\/p>\n Firstly, if you are in the happy position of outright owning your home, as about one-third of Aussies are, this is not such an issue. (Having said that, you may well have your equity earmarked for something else \u2026 either extraction by sale or through something like a reverse mortgage or home reversion\/home access scheme down the track.)<\/p>\n It\u2019s not so happy if you still have debt on a property \u2026 but a simple mindset and then a money change will help greatly.<\/p>\n The first thing to realise is that property prices are on paper only \u2026 unless you have to sell or choose to. (And not many people are choosing at the moment.)<\/p>\n That\u2019s the mindset shift. The money shift that will help hugely is to take control of your debt.<\/p>\n And two things now make this more urgent than ever:<\/p>\n Urgency 1: Talk has turned to interest rate rises rather than cuts. You may soon have to find more money for your mortgage unless you take action.<\/p>\n Urgency 2: If property prices continue to fall for a while, what\u2019s called your loan-to-value ratio will grow. And this is what lenders look at to decide whether you are eligible for particular interest rates, or even for loans at all.<\/p>\n For example, some lenders will only approve you, or offer you the best rates, if your loan-to-value ratio is 80 per cent or less. Be aware, too, that lenders\u2019 mortgage insurance, which is expensive, is necessary above loans of more than 80 per cent in value.<\/p>\n It\u2019s not just new ones either \u2026 it\u2019s refinanced ones.<\/p>\n Related Article This represents a different kind of \u201cmortgage prison\u201d than what we have seen to date. Previously, mortgage prison referred to when you couldn\u2019t refinance because interest rates had risen so far that you could no longer prove you could handle three percentage points more of them, under the stress test the regulator requires.<\/p>\n This mortgage prison is different in that it\u2019s your \u201cwhat-you-own-versus-what-you-owe\u201d that could cut you out of approval and keep you in an existing loan.<\/p>\n So, there is extra urgency if price falls are in danger of pushing you above an 80 per cent loan-to-value ratio.<\/p>\n But this is the solution part of the newsletter \u2026<\/p>\n The easy way to attack your mortgage debt<\/p>\n Solution no.1 is to get your loan down. Pronto.<\/p>\n And one of the most effective ways is to snare an interest rate discount.<\/p>\n There is a clear one percentage point between some of the country\u2019s most popular lenders\u2019 interest rates, and the best.<\/p>\n And the difference between a 5.8 per cent interest rate and a 6.8 per cent interest rate, when applied to a typical loan of $700,000, is huge.<\/p>\n Indeed, it\u2019s $434 a month.<\/p>\n So, your first property fightback move is to try and secure that better deal.<\/p>\n Start by asking your own lender if they will match it. However, if they don\u2019t come to the party, actually switch to a lender charging less.<\/p>\n The beauty of this is that you can then apply what I call my \u201cup-stumps-but-still-stump-up strategy\u201d<\/a>.<\/p>\n You\u2019ve suddenly generated extra money \u2013 that $434 a month \u2013 so simply keep putting it on the loan. This is an effectively free (or at least painless in that you\u2019re used to paying it) method of putting extra on your mortgage such that you dramatically reduce your loan balance.<\/p>\n And hello to increased equity \u2026 every single time you do.<\/p>\n So how much could you slice off your loan if you had the typical $700,000 mortgage? You could save $256,492 and shave four years off the life of a 25-year loan. A full $126,417 of your interest saving comes from the \u201cstump-up\u201d part, where you end up paying that $434 extra a month.<\/p>\n Worth it?<\/p>\n And there\u2019s a second vital debt strategy to implement \u2026<\/p>\n The essential defensive move<\/p>\n The other big factor in a falling property market is to not become a forced seller, which is all down to the security of your income.<\/p>\n So, your next safety move is to do everything you can to shore it up.<\/p>\n Can you skill up? Even if it would require an investment \u2026 the return on that investment might make it worthwhile and if it\u2019s an existing occupation, it may also be tax-deductible.<\/p>\n Can you put your hand up for promotions or more responsibility that will attract higher remuneration?<\/p>\n Most important is that your employer recognises your contribution to the company\u2019s bottom line \u2026 and values it. And if they seem to stop, or need to cut costs, remember that you are eminently employable elsewhere.<\/p>\n Sure, the above may not make you feel more relaxed about property price falls immediately but, over time, it should make you more comfortable.<\/p>\n Nicole Pedersen-McKinnon is a financial educator, the author of How to Get Mortgage-Free Like Me<\/a> and the host of the Minted Kids podcast.<\/p>\n Advice given in this article is general in nature and is not intended to influence readers\u2019 decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/09\/b27915481105132a8687472c1979a1e7a992fab7a0c9e0efb54b80889eb558f8.jpeg\")
A falling housing market could lock homeowners into a \u201cwhat-you-own-versus-what-you-owe\u201d mortgage prison. Michael HowardWhat\u2019s the problem?<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/09\/0597835971437467350d075299be3a4dfefb7189.jpeg\")
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