What if you could have done better with your $440K mortgage? An Aussie homeowner’s regret

Navigating the choppy waters of the Australian housing market can be a daunting task, especially when interest rates take an unexpected turn. Tate Mooney’s tale of mortgage woe is a cautionary one, shedding light on the harsh realities many homeowners face in the wake of the Reserve Bank of Australia’s (RBA) interest rate decisions.

In mid-2022, Tate Mooney and his wife took the plunge into homeownership, purchasing a modest two-bedroom duplex on the Gold Coast for $440,000. At the time, the official cash rate was on the rise from a historic low of 0.10 per cent, reaching 0.85 per cent in June and 1.35 per cent in July. The couple, moving from regional Victoria, thought they were playing it safe by choosing a smaller property. Little did they know, the interest rates—and their repayments—would soon skyrocket.

62% of Australian mortgage holders regret their loan choices, with rising rates pushing many to reconsider their financial planning. Image Source: Tumisu / Pixabay

The Mooneys secured a no deposit home loan through Commonwealth Bank, with Tate’s parents acting as guarantors, putting up part of their property in Victoria as collateral. Initially, the couple rented out their new home for six months before making the move themselves. However, since securing the loan, their monthly repayments have jumped from $1,870 to $2,155, with the interest rate on their home loan rising from 4.49 per cent to a staggering 6.69 per cent.

While they’re managing to keep up with the rising costs, Tate admits that they now wish they had saved for a deposit to create a financial buffer and had fixed their interest rate to avoid the current predicament. ‘We also wish we refinanced a bit earlier because we got locked into a CommBank loan because of the guarantor thing,’ Mooney lamented, highlighting the less competitive rates they were bound to due to their circumstances.

Their story is not unique. New research from Your Mortgage reveals that a whopping 62 per cent of Australian mortgage holders regret their home loan choices, with the top regret being a lack of preparation for interest rate changes. Others rue not securing a fixed interest rate or opting for a longer fixed term, while some borrowers regret borrowing too much or having too small of a deposit.

The high interest rates have left one in seven borrowers in a precarious position, with their regular expenses surpassing their income, and another quarter dipping into their savings to cover everyday costs. However, there may be a glimmer of hope on the horizon, with the RBA expected to cut interest rates this year. Your Mortgage analyst Brooke Cooper advises those struggling to consider refinancing or negotiating better rates or features with their lender.

Looking ahead, the major banks have their own predictions for interest rate cuts, with Commonwealth Bank and Westpac both forecasting a first cut in February 2025, followed by several more to bring the cash rate down to 3.35 per cent by the end of that year. NAB anticipates a similar trajectory, while ANZ expects fewer cuts, resulting in a cash rate of 3.85 per cent by the end of 2025.

For the Mooneys, any reduction in interest rates can’t come soon enough. The couple has had to tighten their belts, adopting a ‘money jar system’ for budgeting and cutting back on luxuries like pub visits and getaways. ‘We don’t do as many adventurous things as we used to before we bought a house. It’s a bit more hanging out at home kind of thing,’ Mooney shared.

What are your thoughts on the rising interest rates and their impact on homeowners? Have you had any similar experiences with your own mortgage? Or perhaps you have tips to share for managing these challenges? We’d love to hear your thoughts and experiences. Drop a comment below to join the conversation!

Also read: NAB slashes mortgage rates: Is it time to refinance?

Abegail Abrugar
Abegail Abrugar
Abby is a dedicated writer with a passion for coaching, personal development, and empowering individuals to reach their full potential. With a strong background in leadership, she provides practical insights designed to inspire growth and positive change in others.

5 COMMENTS

  1. I was paying 17% interest on a home loan in the late 80’s early 90’s. I think today’s borrowers are getting an easy run.
    But we were sensible back then. Paid a 30% deposit. Paid off the loan early because didn’t borrow excessively above our income. Unlike today many with 5% deposits and repayments that are a third of their income.
    IMO it was loans being handed out too easily that contributed to the absurd rise in house prices. That combined with high immigration and tax concessions for property investors was a recipe for disaster as far as housing affordability goes.
    Young people with huge housing debts should be placing the blame where it belongs on the Liberal and Labor governments who have caused it.

  2. Really? Complaining about a monthly increase of $285? Weekly around $72? Even loan repayments of $538 (on increased amount) is damn good, especially for where they live. Their original purchase price of $440k would have seen a very large increase in equity. If they are both working and can’t afford $540 a week, then there is something seriously wrong with their budgeting and spending habits. Like David said above, live through interest rates of around 17%, and being a solo parent, then you will be able to complain.

    • Exactly…..imagine the stew they’d be in if rates were to climb again. Historically rates have averaged close to 10% over the last 50 years. These people borrowed at the lowest rates in history & must have known things could only go UP. I recall borrowers trying to “lock in” a rate of 12% for 10 years back when they hit 17%…..then started to fall & they didn’t think it would go any lower.
      So, $70 bucks a week has them on the ropes. You can’t even buy a carton of beer & a pizza for that.😳

  3. For starters this article is misleading Disinformation.
    A leadin title saying First up the RBA has raised Interest rates??????

    The interest rates have been on hold since December 2023.
    Some banks have already reduced fixed interest loans and most financial analysts are expecting a rate reduction on the 18th February 2025 when the RBA next meets.

    I agree that there is pain in the mortgage community but your article is likely to stir up anxiety. The mention of possible rate relief is buried about two thirds into the article.

    Also the mediScare article, specialist referrals have been part of Australia’s medical environment for decades. Why write an article that also stirs up anxiety.

    Perhaps with an election looming your authors are practising for job applications as script writers for Dutton’s campaign.

    Not a good look.

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