With loan repayments soaring, many are resorting to selling off personal belongings, downsizing homes, or even selling their properties to cope with the burden.
A study conducted by Canstar revealed that nearly half of Australian mortgage holders have contemplated selling off various assets, including their homes, personal items, investments, cars, or businesses, to alleviate financial pressure. Alarmingly, this consideration has turned into reality for nearly a quarter of all borrowers surveyed.
The most common sacrifices made by borrowers include selling furniture, electronics, and collectables, with a significant portion resorting to downsizing their homes or relocating to alleviate the strain. Furthermore, a notable proportion of respondents have opted to sell their homes and rent rather than continue paying their mortgages.
The research also sheds light on the extent to which Australians are resorting to unconventional means to meet their repayment obligations. Pawned jewellery, additional income streams, and the sale of investment properties or other assets have become common strategies employed by mortgage holders to maintain financial stability.
Steve Mickenbecker, a finance expert at Canstar, underscored the profound impact of rising interest rates on borrowers, with repayments witnessing a staggering 62 per cent increase since May 2022. The confluence of higher rates and elevated inflation has prompted many borrowers to take drastic measures, jeopardizing their financial well-being in the process.
While acknowledging the validity of such actions in dire circumstances, Mickenbecker expressed concern over the long-term repercussions of selling homes as a last resort. He emphasized the importance of exploring alternative avenues, such as refinancing or seeking financial counselling, before resorting to asset liquidation.
Refinancing to longer-term contracts or exploring repayment relief measures could offer temporary respite for struggling homeowners. However, Mickenbecker cautioned that such measures might entail additional costs and prolong the repayment period, warranting careful consideration before implementation.
Amidst the prevailing financial challenges, Mickenbecker urged borrowers to seek advice from financial counsellors and explore all available options before making irreversible decisions. The National Debt Helpline, operated by Financial Counseling Australia, offers free assistance to borrowers grappling with financial distress, providing a glimmer of hope amidst adversity.
As Australians navigate the complexities of an increasingly challenging economic landscape, proactive measures and informed decision-making will be essential in weathering the storm. By leveraging available resources and seeking timely assistance, borrowers can chart a course towards financial resilience and stability, safeguarding their homes and future prosperity.
Contact Accountancy Insurance
We would love to hear from you.
About Accountancy Insurance
Thousands of accounting firms offer our tax audit insurance solution, Audit Shield to their clients.
Find out why.