Half of mortgage holders consider selling belongings to cope with rate rises

Nearly half of mortgage holders in Australia have considered selling their homes, personal belongings, and valuables to cope with the financial strain of rising home loan repayments, according to new research from Canstar.

The survey of over 800 Australian mortgage holders found that since the onset of rate rises in May 2022, 49% have considered selling their home, personal items, valuables, investments, car, or business to cope with the financial strain.

Alarmingly, this consideration has turned into reality for almost half (46%) of this group, or close to one-quarter (23%) of all borrowers.

Among the most common sacrifices made by borrowers who have sold items to alleviate financial pressures, personal effects such as furniture, electronics, and collectibles stand out, with nearly one-third (32%) having sold these items.

The family home emerges as the second most common asset sold, with 28% choosing to relocate, while 22% each opted to downsize or move in with family members. A further 14% sold their homes to rent instead.

One-fifth (20%) of mortgage holders parted ways with jewellery and valuables, while an equal percentage sought to generate additional income by selling their skills or labour.

Almost one-fifth (19%) of respondents resorted to selling investment properties or other investments such as shares, ETFs, commodities, or cryptocurrency to maintain financial stability.

In contrast, a smaller proportion of individuals (12%) sold their vehicles, while only 4% sold their businesses to cope with the financial strain.

Canstar’s finance expert, Steve Mickenbecker, said these findings highlight the two-speed borrower market, with only a portion of mortgage holders grappling with the extreme repercussions of rising interest rates.

“Even though the banks report only a relatively modest increase in home loan arrears, the strain of higher rates is taking its toll on a group of borrowers with half considering selling belongings and 46 percent of that group – which is close to one-quarter of all borrowers – following through and actually doing it,” Mickenbecker said.

He added that financial crisis is a time for re-evaluation of priorities and parting with some possessions is a logical reaction if it means holding onto what truly matters.

“The real worry though is that people are parting with investments and worse still selling their homes because they have hit last resort. This is long-term damage being done and the real pain of high interest rates,” Mickenbecker said.

He urged borrowers to seek advice and explore options such as refinancing, accessing redraw facilities, or seeking temporary relief through their lender’s hardship provisions before resorting to selling their home.