Australians fork out record $30 billion in mortgage interest amid rate hikes

Australian homeowners paid $4.8 billion more in mortgage interest to banks in the September quarter compared to the same period last year, new analysis has revealed.

Data from Money.com.au showed interest payments on home loans surged nearly 20 per cent nationwide.

The Reserve Bank of Australia’s Housing Loans Payment data indicated homeowners paid a record $30 billion in interest during the September 2024 quarter.

Approximately 67 per cent of scheduled home loan repayments now went towards interest – the highest proportion in a decade.

For investment loans, interest payments accounted for 72 per cent of repayments.

Money.com.au’s Research & Data Expert, Peter Drennan, said homeowners faced unprecedented challenges in the current market.

“Homeowners are being hit with a perfect storm — interest rates at a 13-year high, skyrocketing property prices forcing buyers into larger mortgages, and more borrowers entering the market,” he said.

A homeowner with a $600,000 mortgage over 30 years now made monthly repayments of $3,702, with $2,464 going toward interest and the remainder reducing the principal, plus fees.

RBA data showed the average variable interest rate on a $600,000 home loan increased from 6.00 per cent to 6.27 per cent over the past 12 months.

This rise meant monthly repayments on a $600,000 mortgage grew by about 3 per cent, or $105.

Despite rising costs, households increased their extra repayments by 24 per cent compared to last year.

For a $600,000 mortgage holder, extra monthly repayments rose to $877, up from $566 a year ago.

Money.com.au’s Home Loans Expert, Mansour Soltani, said higher rates prompted households to prioritise debt reduction.

“Australians are making significant sacrifices, cutting back on dining out, vacations, and everyday luxuries to stay on top of their mortgage commitments,” he said.

Excess payments reached $10.6 billion in the September 2024 quarter, alongside $44.7 billion in scheduled repayments, increasing from $6.8 billion in excess payments during the same quarter last year.