One in three Aussies are losing sleep over interest rate hikes


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One in three losing sleep over rate hikes, 600,000 to cash in on home equity, and one simple step could cut 24% off your power bill. Here are five things you may have missed this week.

Borrowers not ready for rising rates

A survey by Mortgage Choice found the majority of Australian mortgage holders aren't prepared for rising interest rates.

aussies mortgage stress interest rate hikes

One in five respondents said they would be concerned if home loan rates increased by just 1%, and 48% would be concerned if rates rose by 2%.

Worryingly, one in two respondents could only afford to pay an extra $201 on their loan per month.

These concerns are seeing one in three borrowers lose sleep over interest rate hikes.

Despite the concerns, over half (55%) of those with a home loan are clueless about the rate they are currently paying.

Mortgage Choice national sales director David Zammit says, "In this environment, it's important borrowers are informed so they're not overpaying."

He adds, "With the cost of living rising rapidly, Australians will be questioning how to lessen the burden on their hip pockets. Getting a better deal on your home loan is a great place to start."

Downsizer ranks to swell by 600,000

The property market may be cooling but many homeowners have amassed a decent chunk of home equity in recent years thanks to the combination of record-low home loan rates and skyrocketing property values through 2022.

This is seeing 600,000 households make plans to downsize to a smaller property in the next 12 months.

Research by Finder shows almost half the would-be downsizers plan intend to make the move to unlock equity.

More than 200,000 households are downsizing because they don't need as much space as they used to.

The remainder (162,000 households) say downsizing will be a temporary move to save money.

Finder's Sarah Megginson, says "Downsizing is a way to potentially lower your housing costs, if you can find less costly housing that still suits your needs."

She cautions, "You have to be mindful of the costs involved in buying and selling, like stamp duty and real estate commission, because they can really erode the equity you've built up."

One hack to slash power bills by 24%

Electricity bills are set to skyrocket just in time for winter. That makes it critical to shop around for a better deal - especially if you have been with the same provider or power plan for an extended period.

The Australian Energy Regulator says residential customers can currently save around $443 or 24% off their bill by switching to a new plan or provider. Small businesses can save about $1308 or 29%.

To get started, dust off your last power bill, then head to price comparison website Energy Made Easy.

By entering in a few basic details or uploading your bill, the site shows what other retailers are offering.

The Field household put the site to the test and found we could do far better than AER suggests, potentially cutting our annual power bill by about 50% by ditching our current provider. The savings were slightly less, but still significant, by switching to a different plan with the same provider.

CHOICE calls for better protections in the crypto market

Close to one in 10 Australians have purchased cryptocurrency over the past 12 months, but consumer group CHOICE says plenty have been scammed, and the recent nosediving of the crypto market has wiped out billions of dollars of consumers' money

CHOICE's recent Consumer Pulse survey shows more than half of us don't know whether crypto trading comes with similar consumer protections that apply to the sharemarket. About the same number of people believe that such protections should be in place.

As it stands, CHOICE says enforceable protections in the unregulated cryptocurrency market are somewhere between negligible and non-existent.

In a submission to the federal government, CHOICE is calling for a regulatory regime with consumer protection obligations to help put an end to crypto-driven consumer harm.

Seven out of 10 home buyers turn to a  mortgage broker

A record-breaking proportion of home buyers are turning to a mortgage broker for help organising a home loan.

Figures from the Mortgage and Finance Association of Australia (MFAA) show seven out of 10 (69.5%) new residential home loans in the March 2022 quarter were arranged through a broker, up from the previous high of 66.5% in the final quarter of 2021.

MFAA chief executive officer Mike Felton says the broking industry has successfully implemented meaningful reforms over a number of years. These include the legal requirement for brokers to act in a customer's best interest, which was introduced at the start of 2021.

Felton adds, "In a rising interest rate and cost environment, mortgage brokers are exceptionally well placed to assist customers in finding a fairer deal that is in their best interests."

Mortgage brokers do not usually charge borrowers a fee for their services as they receive a commission from lenders.

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A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.