House payment struggle

STRESSED mortgage customers are struggling with repayments despite interest rates remaining at historical lows.

Making lifestyle changes from cutting back on expenses and giving up holidays are among the measures borrowers are resorting to so they can meet their loan commitments.

The Reserve Bank of Australia has kept the cash rate at 1.5 per cent since August 2016 but new analysis has revealed one in two Australians are stressed about making their home loan repayments.

New independent research compiled for online home loan marketplace HashChing found borrowers are being forced to reign in their spending — 44 per cent have cut back on nonessential items and 40 per cent have sacrificed going on a holiday.

Home loan interest rates re- main at rock-bottom lows for both owner occupiers and investors with many deals below the 4 per cent mark.

HashChing chief executive Mandeep Sodhi said about one in three borrowers were committing more than 25 per cent of their income towards repayments.

“Anything about 30 per cent will usually mean you are stretched,’’ he said.

Banks continue to massage their interest rates and just this month the big four banks all moved fixed rates indicating that competition for new business is still rife.

But figures show if borrowers refinance they can make mass savings — on a $300,000 30-year loan if they switched from the average variable rate of 4.59 per cent to 3.59 per cent they could reduce their monthly repayments from $1536 to $1362. This would save $62,600 over the life of the loan.