Financially Preparing for a Year of Mortgage Anxiety

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Mobaraka Mohammadi, a 23-year-old from northern Adelaide, works 12 hours daily to cover day-to-day costs and pay her mortgage

Should her financial obligations or living expenses rise any further, Ms Mohammadi might have no choice but to put the university on hold to work more hours.

“I was trying to cut a few of my hours so that I can concentrate on my study, but if I cut any hours, I’m not going to be able to pay my mortgage,” she said.

Her abode came with a hefty $390,000 price tag, and the monthly mortgage payments were initially set at $750.Due to recent rate hikes, Ms Mohammadi’s instalments were raised to $940.

If the interest is going to go higher than this, it means I’ll have to quit my study, and I have been thinking about it because I can’t juggle full-time study and full-time work,” she added.

The cost of groceries and other bills has accumulated, leaving her no option but to begin budgeting for the first time.

Last month, the Reserve Bank of Australia (RBA) raised the cash rate by 25 basis points to 3.1 per cent – a historic high.

Mortgage broker Gracious Chidhakwa stated that some households had already started mortgage delinquencies, and she further warned that we have yet to feel the full brunt of the rate hikes.

We are now seeing some missing their repayments, some are coming back to us saying, ‘look, can we refinance as soon as possible,’ or some are having to sell because they may not be able to afford that property anymore,” Ms Chidhakwa said.

She expressed that limited rental vacancies and higher interest rates were causing the prices of rent to inflate as landlords sought to pass along rising interest rate costs to their renters.

Those who want mortgages, some are having to sell, some are having to downsize, some are having to make those hard calls,” Ms Chidhakwa added.

Ali Kawser, a mortgage broker and entrepreneur of AK Home Loans in Melbourne’s westside, reported that some prospective homeowners who bought house and land packages last year have opted to back out.

Ms Chidhakwa encourages those having difficulty meeting mortgage payments to reach out to their broker now and look into loan prospects from smaller lenders that offer better deals. She also cautions against missing repayments as this could hinder one’s ability to receive money in the future.

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