Warning of mortgage stress with interest rates set to rise

Homeowners with mortgages should start planning for interest rate rises from June. The four big banks have this week announced they will look at increasing rates which have been at a record low. Economic experts have warned a one per cent interest rate hike could see more than half (58 per cent) of Australians with a home loan in mortgage stress. Analyst reports suggest an estimated 1.5 million households with a mortgage are already spending more than they earn. The Great Australian Rip Off consumer campaign is urging homeowners who have a mortgage to research their refinancing options now and consider a fixed rate. “It would be the first interest rate rise in almost 11 years and with homeowners already struggling with soaring cost of living expenses it is going to put millions of hardworking Australians under pressure,” campaign spokesperson and consumer advocate, Trond Smith said. The Great Australian Rip Off campaign is uniting consumers to try to bring down the cost of living. The campaign, launched ahead of the Federal election, exposes ‘secret’ commissions of up to 60 per cent that are paid to brokers, commercial comparison websites, and third parties which are pushing up the price of insurance premiums. “The commercial comparison sites claim to save you time and money, but secret and very high commissions have been found to be a big driver in pushing up the general cost of premiums and insurers have admitted at multiple inquiries,” Mr Smith said. The Australian Competition and Consumer Commission (ACCC) has recommended an industry code to expose the ‘secret’ commissions and for penalties to protect consumers, but the recommendations have so far been ignored by government. “There needs to be a mandatory code to expose commissions, expose commercial relationships between brokers, commercial comparison websites and third-parties with suppliers, and impose penalties for breaches of the code,” Mr Smith said. “The advice for people who are worried about household budgets is to do their research both in regard to their mortgage options as well as shopping around when it comes to insurance and other services such as electricity.”