Joust Discuss Mortgage Stress Rates on Weekend Sunrise

May 5, 2022

Joust CEO Carl Hammerschmidt & Digital Finance Analytics sat down with Weekend Sunrise on Channel 7 to discuss the shocking rates of mortgage stress that Australians are currently facing.

Scroll down to find the full transcript.

“Almost almost half a million households in Victoria are living with mortgage stress.”

Matt: New research has revealed a nightmare in the making for more than two million home buyers as interest rates start going up. Home loan comparison site Joust found42% or 1,539,00 million mortgaged households were already in financial stress. That was in March and before this week's interest rate rise. 

Female Voice: So, if the official rate goes up 3% over the next 18 months, as some predict. There would be another 933,000 households struggling to make ends meet by Christmas next year. It's a shocking statistic isn't it, with he rate rise has started to race rather to refinance home loans. So, this morning where do you find the very best deals.

Matt: Well, Carl Hammerschmidt is from home loan comparison website Joust. Morning to you Carl.

Carl: Good morning, Matt. How are you?

Matt: Yeah, really well thank you. You've been having a look at a lot of the figures already and done some pretty intensive research. Which states have been hit hardest by the rate hike?

Carl: So, we work with accompany called Digital Finance Analytics, they're a research company they've got a survey of 52,000 households in Australia. And they understand their spending habits and their financial habits and they found that Tasmania and Victoria are actually the states that have been impacted the most by mortgage stress before the rate rises. So, they're estimated that 55% of Tasmanian households suffering from mortgage stress and 44% of the households in Victoria. And if you look at that on a whole number basis it's only about 40,000 households in Tasmania but it's almost half a million households in Victoria.

Carl: Well, look it means that there's a lot of households going to have to consider their spending habits, they're going to have to consider the cost of living in pressures that they're under at the moment, and they should be considering the rates that they're currently on and shopping around and making sure that they're getting the best deal.

Matt: Given we don't know Carl just how high the interest rates will go. Is it too soon to start estimating when people might begin to default on some of their mortgages?

Carl: You have to remember that I guess the banks have known these raises are coming for quite awhile, and they've factored that into I guess their lending practices in the terms of the serviceability and people's ability to pay back their mortgages but having said that there's a whole generation of borrowers out there, who have only ever seen their rates go one-way and that's South. Now, that they're going to experience these growing rates, and as I said that's combined with the extra cost of living pressures. There's a lot of households if interest rates go up one or two percent that's an extra five to ten thousand dollars a year in repayments and there are many households out there that are really going to have to consider their circumstances and tighten the belt significantly.

Female Voice: You mentioned their shop around at lots of people, record number of people looking to refinance. Who are they? Who should be looking absolutely everybody? 

Carl: Well, absolutely, I meant Joust, we see that the full range of borrowers coming on to look to refinance and see if they can get a better deal, you've got consumers who have been on these low rates, these fixed rates for a long time now and they're starting to really consider their circumstances and find out whether they're getting the best deal possible I mean if you've been on a certain package for a couple of years now. There's a very big chance that you could be paying a loyalty tax you could be paying too much you should be. And so, our advice always is that you should shop around we see customers on average and just to refinance can save up to three and a half thousand dollars a year on their repayments on average.

Matt: Which can almost offset the one percent increase in some of these mortgage rates too if it comes that fast.

Carl: Absolutely.

Female Voice: Yeah. 

Matt: So, it's really good advice if you haven't done it to this point then do it. 

Carl: Absolutely, I couldn't and that's really what consumers need to be looking into. Are you getting the best rate and is your lender looking after you?

Female Voice: Because we've had to switch gears, haven't we even though that we've been told that this was coming. When it actually happens, it's pretty scary for a lot of people. All right Mr. Schmidt great to see you. Thank you.

Carl: Absolutely, thanks for having me on.

Matt: Thanks, Carl.