Borrow
730,000 mortgage-holders to be hit with higher repayments
Hundreds of thousands of borrowers on interest-only loans are tipped to be hit with higher repayments this year, according to new results.
730,000 mortgage-holders to be hit with higher repayments
Hundreds of thousands of borrowers on interest-only loans are tipped to be hit with higher repayments this year, according to new results.
Data released by comparison site Finder showed that 730,000 homes will convert from interest-only loans to principal and interest loans in 2020.
Graham Cooke, insights manager at Finder, said that borrowers on interest-only loans need to financially prepare for their interest-only period to expire.
“Borrowers can be hit hard once their mortgage converts to principal and interest, as their repayments can increase significantly. If you know your interest-only loan is expiring this year, it’s important to factor this into your budget,” Mr Cooke said.
On the average loan of $395,000, interest-only borrowers should brace themselves for a $3,600 increase in expenses if they are forced onto a standard variable rate loan with an interest rate of 4.8 per cent.
Mr Cooke said that interest-only borrowers don’t need to stick with the same lender once their loan converts.
“If your interest-only loan is due to expire in the coming months, start comparing your options now. There are hundreds of principal and interest loan products to choose from.”
“Banks will sometimes offer a discounted variable rate on a case-by-case basis in a bid to keep your business. It’s therefore worth negotiating with your lender for the biggest rate discount you can get,” Mr Cooke continued.
The comparison site advises the following risks and benefits for interest-only loans:
Benefit: lower repayments. IO repayments are cheaper at first, which can help if you’re struggling to make ends meet. But this won’t last forever, so be prepared for your payments to increase.
Benefit: high-growth investment. IO loans are popular with property investors. You can buy a property, make low interest repayments, watch the property increase in value, then sell at a profit.
Risk: no equity. If your property doesn’t increase in value, you won’t get much benefit on an interest-only loan. You may even end up with negative equity.
Risk: reverting. Once the interest-only period expires, your payments will increase once they revert to principal and interest. This can take a big toll on the household budget.
RELATED ARTICLES
-
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
-
Trust is the new yield: Why brokers win when credibility compounds
-
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
About the author
About the author
Loans
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
Australian home loan interest has rebounded even as households lean harder on cards and personal loans — a classic late‑cycle signal that demands sharper risk, pricing and AI executionRead more
Loans
Trust is the new yield: Why brokers win when credibility compounds
In a market where products look interchangeable, credibility has become the most defensible asset in mortgage broking. With broker channel share hitting record highs and AI reshaping client ...Read more
Loans
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
Australia’s mortgage stress has eased to its lowest level since early 2023, creating a rare—likely brief—window for lenders, brokers and fintechs to reset risk and rebuild growth. This case study ...Read more
Loans
Why ANZ’s tougher stance on company-borrowed home loans matters: A case study in risk recalibration, competition, and what CFOs should do next
ANZ has tightened mortgage credit parameters for loans where a company or trust is the borrower—an apparently narrow policy tweak with wide operational consequences. It signals a broader recalibration ...Read more
Loans
Mortgage 2026: Australia’s share‑of‑wallet war will be won on switching, data rights and AI discipline
The defining feature of Australia’s 2026 mortgage market won’t be house prices; it will be switching velocity. With competition reforms sharpening the Consumer Data Right, lenders and brokers that ...Read more
Loans
Mortgage remorse reshapes the game: Australia's lending squeeze set to redefine banking and household demand
A growing cohort of Australians is rethinking recent home loan decisions as higher repayments collide with household budgets. This isn’t just consumer angst; it’s an economy-wide red flag for lenders, ...Read more
Loans
Aussie mortgage game-changer: Brokers dominate while AI sharpens the edge
Mortgage brokers now originate roughly three in four new Australian home loans, a structural shift that rewires bank economics, product strategy and customer acquisition. MFAA data shows broker market ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
Loans
Australia’s credit pivot: Mortgage enquiries hit a three‑year peak as households lean on plastic — what lenders and fintechs must do next
Australian home loan interest has rebounded even as households lean harder on cards and personal loans — a classic late‑cycle signal that demands sharper risk, pricing and AI executionRead more
Loans
Trust is the new yield: Why brokers win when credibility compounds
In a market where products look interchangeable, credibility has become the most defensible asset in mortgage broking. With broker channel share hitting record highs and AI reshaping client ...Read more
Loans
Mortgage Relief Window: How Australia’s Lenders Are Rewiring Risk and Growth at a Three‑Year Lull
Australia’s mortgage stress has eased to its lowest level since early 2023, creating a rare—likely brief—window for lenders, brokers and fintechs to reset risk and rebuild growth. This case study ...Read more
Loans
Why ANZ’s tougher stance on company-borrowed home loans matters: A case study in risk recalibration, competition, and what CFOs should do next
ANZ has tightened mortgage credit parameters for loans where a company or trust is the borrower—an apparently narrow policy tweak with wide operational consequences. It signals a broader recalibration ...Read more
Loans
Mortgage 2026: Australia’s share‑of‑wallet war will be won on switching, data rights and AI discipline
The defining feature of Australia’s 2026 mortgage market won’t be house prices; it will be switching velocity. With competition reforms sharpening the Consumer Data Right, lenders and brokers that ...Read more
Loans
Mortgage remorse reshapes the game: Australia's lending squeeze set to redefine banking and household demand
A growing cohort of Australians is rethinking recent home loan decisions as higher repayments collide with household budgets. This isn’t just consumer angst; it’s an economy-wide red flag for lenders, ...Read more
Loans
Aussie mortgage game-changer: Brokers dominate while AI sharpens the edge
Mortgage brokers now originate roughly three in four new Australian home loans, a structural shift that rewires bank economics, product strategy and customer acquisition. MFAA data shows broker market ...Read more
Loans
Fixing the future: How brokers and lenders can turn rate-hike anxiety into strategic advantage
Australian borrowers are leaning into short-term fixed loans as rate uncertainty lingers, shifting risk from households to lenders and their funding partners. That creates a narrow window for broker ...Read more
