Roughly 15 per cent of Australians are facing housing stress as the economic toll of the coronavirus pandemic mounts, a survey has found.
A survey of 1,010 respondents by consumer research website Finder revealed that 15 per cent, equivalent to 2.9 million Australian residents, are asking for their mortgage repayments to be suspended or rent reduced as a result of the fallout of the COVID pandemic on their finances.
Based on the survey, Finder estimates nearly 1.2 million home-owners have already contacted or plan on contact their lender regarding a pause in their mortgage repayments.
A further 1.7 million Aussies intend on negotiating cheaper rent with their landlord, it says.
Australia’s economy has sustained heavy damage after strict social distancing measures introduced in late March to check the spread of coronavirus resulted in widespread business closures.
Figures from the Australian Bureau of Statistics on Friday showed more than half-a-million jobs were lost in April, but economists says the true picture could be much worse.
Younger Australians are feeling the heat the most with one-in-four looking for ways to cut housing costs, Finder says.
With many left without jobs, lenders are offering the option of deferring mortgage repayments to cope.
However, pausing mortgage repayments should be a last resort, Finder personal finance expert Kate Browne says.
She said home owners would have to pay greater interest later as well as the principal.
For example, in case of a family who took a $500,000 loan 10 years ago at an average variable rate of 3.9 per cent, a pause in repayments for six months would result in them paying an extra $11,127 over the remaining 20 years of the loan.
Home owners should instead consider refinancing or switching lenders, Ms Browne said, with many lenders offering interest rates of less than 3 per cent.
A similar survey by financial services provider JD Power has found 62 per cent of Australians cannot manage their debt due to the impact of COVID-19.
The survey of 1,415 Australians found monthly credit card payments were the most common debt that people were struggling to pay.