Close to two-thirds (64 per cent) of Australian homeowners are worried about meeting their mortgage payments as interest rates continue to rise, according to new research released by AMP Bank.
The impact is being felt most acutely by younger Australians and those who have purchased a home in the last 12 months, a period when property prices were at record highs. Australian homeowners aged 44 and under are particularly concerned about their finances, with 74 per cent worried about meeting mortgage repayments.
In response, the majority (58 per cent) of Australian homeowners have had to stretch their household budgets to make ends meet, with spending on food and clothing among the most common expenses to be cut. Currently, mortgage repayments rank as the largest expense for 68 per cent of homeowners.
In addition to budget cuts, close to half (43 per cent) of homeowners are considering refinancing their home loan in the next year, with the desire to get a better rate cited as one of the main motivators (78 per cent). Younger Australians are more open to refinancing, with 57 per cent saying they were considering it, well above the national average.
Among those considering refinancing in the next year, one in five (19 per cent) said the complexity of the process was top of mind as a barrier, and 13 per cent cited the time commitment required to refinance as a barrier. Other main reasons people hadn’t yet acted included the perception that the financial benefits would be too small (22 per cent) and uncertainty around when is a good time to refinance (20 per cent), given the changing interest rate environment.
As more Australians look at the opportunity to refinance their home loan, an easy and efficient application process and fast approval is becoming increasingly important, leading to a rise in the number of digital mortgage entrants and offers in the market.
Sean O’Malley, AMP Bank Group Executive said:
“We know it’s a tough time for homeowners facing into higher interest rates. For some, refinancing their home loan might help to save money and improve overall financial wellbeing.
“Australians are increasingly time poor so understandably refinancing a mortgage is not going to be top of the priority list, but with new digital technology it’s often a lot easier than what people expect.
“Launching a digital mortgage has been a significant step forward to deliver better outcomes for our customers. The digital mortgage, which launched today, makes the refinancing process simpler, and in most cases, a lot faster.
“In the time many people spend commuting to work, it’s possible to apply and receive approval.
“With the growth of digital capability, applying for a home loan online has become quicker and easier than ever before.
“We listened to customers, and to the market, and through this capability we’re able to support more Australians to create wealth through property.”
AMP launches digital mortgage
In May 2022, AMP Bank announced it was partnering with Nano to develop a digital mortgage product, which is today officially launching to the public.
AMP Bank's digital home loan enables applicants to obtain unconditional approval in as little as 10 minutes, subject to the applicant’s circumstances.1
In addition to the speed to approval a fully online home loan enables, the application gives a streamlined customer experience. The digital technology is paperless, eliminating the need to upload financial statements, and allows applicants to verify their identify using their mobile device.
The offer is available through AMP Bank’s website, initially for customers to refinance an existing home loan with another lender to the AMP Essential Home Loan. The offer will extend to new loans and more fully featured products in 2023.
AMP Bank’s digital mortgage leverages Nano’s lending platform, bringing the digital offer to market in six months.
This new capability strengthens AMP Bank’s position as a digitally-enabled bank, and its mortgage growth objectives in the retail direct-to-consumer market.
The development of a digital home loan reflects AMP Bank’s ongoing strategic investments in digital technology to simplify and enhance customer and broker experience.
For more information visit the offer website.
Tips for managing financial wellbeing
1. Find your bearings: Start by clarifying exactly where you are financially, including both your spending and income. Then take advantage of one of the many budget/tracking apps that provide a clear view of your spending patterns, for example AMP’s budget planner calculator and expense planner calculator, and ASIC’s MoneySmart tools.
2. Check your home loan is right for you: There are a range of home loan products on the market which come with different features based on customers’ preferences, needs and eligibility. Consider what loan options best suit you and your individual circumstances.
3. Get assistance when you need it: There’s plenty of research showing that people who draw on expert advice are less financially stressed and make better decisions. Use reputable sources such as your financial institution, government resources, and trusted third-party comparison websites.
Don’t hesitate to contact your bank or talk to your broker for specialised help. In cases where it’s needed, most banks will have dedicated financial wellbeing support available for customers.
About the research
AMP Bank commissioned Dynata to conduct an online survey of the Australian population 18 years and over who currently hold a mortgage. Data from more than 1,000 respondents was collected in September 2022. The survey was nationally representative and conducted for market research purposes to understand the impact of rising interest rates, and the perceptions of Australian homeowners towards refinancing.
Disclaimers
The product issuer and credit provider is AMP Bank Limited ABN 15 081 596 009, AFSL and Australian credit licence 234517.
Information including interest rates is correct as at 10 October 2022 and is subject to change without notice. Any application is subject to AMP Bank's approval. Terms and conditions apply and are available at amp.com.au/bankterms or 13 30 30. Fees and charges may be payable.
1Refers to the time once the application process has been completed. The time to receive a full unconditional approval will vary. Unconditional approval could take longer if we need to seek clarifications from the applicant, or if we need to undertake a physical property inspection. The speed of response is also dependant on the time any second applicant takes to confirm their application details, and for all applicants to complete the biometric ID check.
AMP Bank is a member of the Australian Banking Association (ABA) and is committed to the standards in the Banking Code of Practice.
A target market determination for these products is available on at www.amp.com.au/bank/tmd.
