Rate cut reality check: 60pc of Aussies still struggling

A new survey has revealed that 60 per cent of Aussie borrowers are still experiencing financial strain despite recent interest rate cuts.

Finder surveyed 1027 Aussies, of which 297 were mortgage holders, with three in five respondents still struggling to make ends meet, even after the Reserve Bank of Australia (RBA) cut the official cash rate to 3.85 percentage points at its most recent meeting, the first time it has been below 4 percentage points since May 2023.

RBA Governor Michele Bullock . Picture: NewsWire / Nikki Short

But that is still not enough for some borrowers, with Finder revealing that based on their findings, almost two million mortgage holders were still feeling the financial heat.

“Taking into account yesterday’s rate cut, half of borrowers (50%) would still need two or more interest rate cuts to comfortably afford their mortgage, while 17 per cent – equivalent to 561,000 mortgage holders – would need five or more (cuts),” the survey found.

“Only one in three (32%) said they would be completely fine with their rate even before the cut.

“A further eight per cent said they only needed one cut to be comfortable, and they just got it.”

Finder

It was further revealed that women (65%) were more likely than men (54%) to need a drop in their interest rate to comfortably afford their mortgage.

Rebecca Pike, money expert at Finder, said millions of Australians were counting on multiple rate cuts to ease the pressure.

“We are moving in the right direction, but millions of mortgage holders will lose grip on their loan if interest rates don’t keep steadily falling,” Pike said.

“Without significant rate cuts from the RBA, many will face serious financial strain by the new year.”

Pike said many borrowers had drained emergency savings topping up their home loan and coping with the rising cost of living.

“Households are desperate for home loan relief in the form of multiple rate drops,” she said.

“If your provider is not competitive, now is the time to consider refinancing.

“We’re beginning to see lower fixed rates emerge as variable rates fall and lenders ramp up competition for new business.”

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A couple discussing their home loan with a mortgage broker. Picture: iStock.

But while the rate cut will be welcomed by mortgage holders, it will likely be another cruel blow for those still trying to get a foot on the property ladder.

SQM Research managing director Louis Christopher said the rate cut would send auction clearance rates soaring, predicting property prices to rise 10 per cent by the end of the calendar year.

Mr Christopher said first-home buyers needed to get in before the back end of 2025.

“It is very likely housing prices will rise from here and continue into 2026,” Mr Christopher said.

“From today’s rate cut and the one in March, first home buyers are in a better buying position compared to six months ago.

“Their purchasing and borrowing power has increased. However, if I am right about price rises, they will need to move quickly, otherwise they will be back to square one on affordability.”

Barefoot investor Scott Pape said that while the rate cut would help those trying to pay off their mortgage, it would also see more of the “wrong people” get into the housing market.

“If I was a young person right now I would be pretty pissed off,” Mr Pape told news.com.au

Barefoot Investor Scott Pape says “I’d be pissed”

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RELATED: ‘Pissed’: Barefoot Investor takes aim at RBA amid predictions housing prices set to soar after rates cut

Finder

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