A recent study has found that a large number of mortgage holders are taking measures, including selling properties and personal items, to cope with the increasing financial pressure brought on by rising mortgage repayments.
According to the latest survey by financial comparison website Canstar, nearly half of Australian mortgage holders have considered selling properties, personal items, valuables, investments, cars, or businesses to ease financial strain.
The survey of over 800 mortgage holders revealed that 23% of borrowers have turned this consideration into reality.
The most commonly sold assets by borrowers are furniture, electronics, and collectibles, with nearly 32% of borrowers easing financial pressure through the sale of these items.
The second most common asset sold is residential property, with 28% of borrowers choosing to relocate, and 22% opting to downsize or live with family.
Additionally, 14% of borrowers choose to sell their homes and rent instead of paying the mortgage.
Data shows that one-fifth of mortgage holders have pawned jewelry and other valuables to meet the increasing repayment amounts.
Meanwhile, 20% of individuals are seeking additional income.
Canstar’s research also found that 19% of respondents have resorted to selling investment properties or other investments (such as stocks, commodities, or cryptocurrencies) to maintain financial stability.
Only 12% of respondents chose to sell vehicles to get through tough times, while 4% sold their businesses to address financial pressures.
Financial expert Steve Mickenbecker from Canstar stated, “Despite the relatively small increase in housing loan arrears reported by banks, the pressure of higher interest rates is impacting some borrowers. Half of the borrowers are considering selling assets, with 46% of borrowers (nearly a quarter of all borrowers) opting to pawn them.”
He noted that unemployment, family breakdown, or illness could threaten future financial situations, with repayments increasing by 62% since the interest rate hike in May 2022.
Mickenbecker explained, “In addition to high inflation, this is a significant event for many borrowers, enough to trigger actions such as selling assets to maintain their financial balance.”
“This is especially true for those who have purchased their first property in the past four to five years.”
He emphasized that a financial crisis is a time for mortgage holders to reassess their priorities, and if they want to keep their property, pawning assets may be a “completely logical response.”
However, he expressed concern that selling homes as a last resort is worrisome.
He said, “We can only hope that borrowers have sought advice and are truly at their last resort because there are steps they can take before giving up their houses.”
Mickenbecker urged mortgage holders to consider refinancing, signing longer-term contracts, or seeking short-term relief by reducing repayments or paying only loan interest.
But he warned that payment relief measures may eventually lead borrowers to pay more interest and extend repayment periods.
Mickenbecker added, “Mortgage holders considering selling their homes are best advised to seek advice from Financial Counselling Australia, a free national debt assistance hotline run by the government.”
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