Big money worry for Australians

Australians are increasingly worried about paying rent and mortgages. Photo / Getty Images

One in four Australians – 25 per cent – are worried about how they will pay the rent or mortgage after Christmas, according to new research by comparison site Finder.

That's the equivalent of 4.8 million Australians who may have difficulty coming up with the funds to pay their mortgage or rent.

The Finder survey of 1004 respondents revealed 16 per cent of Australians are somewhat worried about meeting payments, while a further 9 per cent say they are extremely worried.

The problem is more pronounced for men, with nearly one in three – 31 per cent of those surveyed – anxious about paying rent or their mortgage after Christmas, compared with 19 per cent of women.

Sarah Megginson, home loans expert at Finder, said in COVID times, Christmas could push people over the edge financially.

"Many households are still facing hardship and relying on stimulus money to get by as the pandemic goes on," she said.

"For families whose income for December is less than it was last year, this can cause significant budget shortfalls and lead to financial trouble," Ms Megginson added.

"Many will have to choose which bills to fall behind on."

The research shows that young people are the most vulnerable when it comes to missing their payments.

One in three – 33 per cent – Gen X and Gen Y Aussies, respectively, are worried about paying their rent or mortgage over Christmas, compared to just 5 per cent of Baby Boomers.

Many young Aussies have found themselves jobless this year, as youth unemployment hit a 23-year high of 16.4 per cent in June, leaving them the most vulnerable to missed rental or mortgage payments.

Victorian households are the most burdened by their living costs, with a whopping 37 per cent of residents concerned about making rent or mortgage payments over the festive season.

While Victoria bore the economic brunt of the pandemic, rental prices have not fallen in proportion with the recession. In Melbourne, the median asking rent in September was AU$425 (NZ$458), down just 2 per cent year-on-year, according to CoreLogic data.

Finder analysis of the Australian Bureau of Statistics data shows the total value of owner-occupier home loans in Australia reached a record high AU$16.5 billion in October, a 24 per cent increase year-on-year.

First home buyers are also borrowing 44 per cent more than they were last year.

"With interest rates at record lows, Australians on fixed-term contracts may not be getting the best deal for their home loans," Ms Megginson said.

"Now is a great time to refinance your home loan – just a small change in your rate could end up saving you thousands.

"Some lenders offer cashback for refinanced loans, so it's worth scanning your options."

Ms Megginson said it's not too late to keep financial stress at bay this holiday season.

"Shop smart by taking advantage of the sales, avoid travelling to expensive areas, and keep your energy bill low by replacing airconditioning with a fan," she suggested.

"If you're having trouble making your mortgage repayments, contact your bank and discuss your options.

"If you keep them in the loop and continue making regular repayments, they'll work with you through this tougher season," Ms Megginson said.

IF YOU'RE STRUGGLING WITH RENT OR MORTGAGE PAYMENTS:

Negotiate with your landlord

Rental rates are not set in stone, so if you feel you're paying too much it might be time to ask for a discount. Be sure to come prepared with comparative prices for similar properties in your area, emphasise why you're a good tenant, and most importantly, be polite.

Move in with friends

If your current lease is up for renewal, why not move into a sharehouse to save money? This way you can split the cost of rent, bills and groceries.

Consider refinancing

If you've been with the same lender for a long time there's a good chance you could find a better deal elsewhere. Interest rates are at record lows, with some dipping as low as 1.88 per cent. With this in mind, talk to your lender or compare your options online. Your current lender may also be willing to negotiate a lower rate in order to keep you as a customer, which can lead to instant savings.

Do a spending audit

The new year is the perfect time to take a look at your finances and see if there are any expenses that can be left in 2020. Pay close attention to "nice-to-haves" like streaming services, gym memberships, or other subscription services and see where you can put a little money back in your own pocket.

- News.com.au