The rising cost of living forces Australians to deal with financial stress. For many people, what was once a stable monthly expense has become a fluctuating burden, especially as homebuyers switch from fixed-rate loans to variable-rate mortgages. While the lowering of power and fuel costs provides some relief, it is insufficient to offset the rising costs. The most recent statistics from the Australian Bureau of Statistics show that costs are high, and so homeowners should find other ways to manage their finances.

Employee Households Struggling with Rising Mortgage and Insurance Costs

Employees who are entirely dependent on wages have thus far expressed their agony over skyrocketing mortgage interest charges, as well as the hike in insurance premiums. Insurance costs, particularly those for homes, contents, and motor vehicles, have been increasing over the past few years. The rise of insurance premiums slowed a little with the easing of reinsurance costs, but it is still a huge burden on household budgets.

People who purchased homes over the course of a flat-rate mortgage at a very low-interest period are now facing increased repayments with the gradual conversion into market-driven constantly changing loans. The transition from fixed to variable-rate mortgages put borrowers in a more difficult position since they started budgeting with easily calculable exact payments, but market variables made it impossible now.

Mortgage Rollover Effect Creates Financial Pressure

The transition from fixed-rate credits to variable-rate loans is the primary cause of financial difficulties in most households. Borrowers who benefited from low fixed rates are now being imposed with high monthly repayments as their loan type changes to variable rates, which may fluctuate according to the interest rates. This uncertainty and increase in monthly payments are making families manage their budgets in a different way.

Variable-rate loans accounted for 85% of the loans used by homeowners to finance their own homes, up from 83% in the previous quarter. As a result of the higher percentage of variable-rate loans, the surplus part of household expenditure is spent on mortgage repayments, which seriously hampers money management in many households.

A Slight Drop in Electricity and Fuel Costs Provides Limited Relief

The 2024–25 Commonwealth Energy Bill Relief Fund (EBRF) rebates helped many families lower their electricity bills. However, such rebates have come in different timeframes for various states and territories, with a considerable portion of households receiving catch-up payments already in the December quarter. Despite these shifts, housing prices, especially rents, have persisted as a colossal expense for a larger demographic of families, and so the relief being sought by some has been limited.

Ongoing Challenges for Australian Households

Transferring from fixed-rate loans to variable-rate loans has proved an additional barrier for households with the budgeting process. With interest payments on a mortgage becoming a larger part of the household budget, many families are coping with an unstable financial situation. While there was some degree of relief from decreasing electricity and fuel, rising mortgage interest and insurance premiums have been further aggravating factors.

The rising cost of living is burdening families who rely solely on their salaries. At OM Financials, we provide guidance to support the reduction of your mortgage and insurance costs while securing your financial situation. We help you minimize your mortgage payments and insurance costs, give us a call at 04788 769 67 for all your financial queries