According to Finder’s Consumer Sentiment Tracker, more than one-third of mortgage holders were struggling to make their payments in February, representing approximately 1.2 million homeowners under financial stress.
The 25 basis point reduction will decrease monthly repayments by $103 for the average home loan of $641,416.
The severity of the mortgage crisis is highlighted by recent data showing 11 per cent of borrowers have missed a mortgage repayment in the past six months.
Even more concerning, Finder’s research reveals that 37 per cent of borrowers need their monthly repayments to decrease by $500 or more to achieve financial comfort.
Graham Cooke, head of consumer research at Finder, said it’s a critical situation facing many homeowners.
“This rate cut is a lifeline for millions of Australians teetering on the edge of mortgage default, but for some, it may be too little, too late,” Mr Cooke said.
The banking sector has responded positively to the rate cut, with 28 lenders, including all four major banks, announcing they will pass on the full 25 basis point reduction.
These changes will take effect between February 18 and March 10, providing some relief to stressed borrowers.
For many households, the situation remains dire, with 14 per cent requiring their monthly repayments to decrease by $1,000 or more to escape financial stress.
This follows earlier warnings when one in seven homeowners predicted they would struggle with their mortgage by February if rates didn’t decrease.
Mr Cooke advises borrowers to be proactive in seeking better deals.
“If your lender isn’t quick to pass on the cut it’s time to shop around,” he said.
“The very lowest rates now have a ‘5’ in front of them.”
“With millions of homeowners struggling to meet their repayments, the pressure on household budgets has reached a breaking point.
“While this rate drop provides some relief, many households will still need to make tough financial decisions to stay afloat.”
