A young Brisbane couple have been forced into making an “impossible” choice — and it’s a scary reality many Aussies are facing.
A young Brisbane couple have been forced to sell their dream home after they could no longer afford the repayments.
The cash rate currently sits at 4.1 per cent, the highest it has been since 2011, and Aussies aren’t just feeling the pinch — they are going under.
Alex Mackley, 34, is a landscape gardener and previously his full-time wage had been more than enough to support his wife and young daughter.
But over a 12-month period Mr Mackley’s mortgage repayments doubled, and it crippled the young family.
The couple were previously in a relatively good financial position — they bought their house with a hefty $300,000 deposit but pretty quickly, their $400,000 mortgage became unmanageable.
“On a semi-fixed income with a young child and a partner that works 10 hours a week it hurt, it did,” he told news.com.au. “It was stressful.”
Mr Mackley found himself in a position where his whole weekly pay was going into paying off the mortgage and their bare minimum bills.
The young dad was bringing home around $1179 a week when the mortgage repayments surged to $600 weekly.
Their mortgage doubling meant they couldn’t afford their usual bills like childcare payments and mobile phone plans.
When Mr Mackley crunched the numbers, he needed about $1000 a week to live on, and suddenly he couldn’t afford it.
Mr Mackley explained that was left with about “100 bucks” to his name, and suddenly their financial situation went from normal to “impossible”.
“I had no savings, so I’d have to use a credit card to pay my bills,” he said.
The family tried to rein in spending, cancelling their contents insurance, streaming services, even their internet connection — but they still couldn’t get ahead.
Mr Mackley admitted that in the “past”, they didn’t have to be bargain shoppers, but suddenly they found themselves in a whole new position. Even just going to the grocery store reminded them of how tight things were money-wise.
“If it wasn’t on special, we probably wouldn’t buy it,” he said. “We were looking more for clearance items as well. Look, everything got cut back.”
Young Aussies are struggling with rising interest rates. Picture: iStock
Mr Mackley even changed his job to save more.
“I took a job where I got a company vehicle so I didn’t have a car to pay for,” he said.
Meanwhile, his partner took on extra teaching classes as a pilates instructor, but while the extra money helped, it was all just causing further stress.
“It put more strain on our family situation because I would go to work during the day, and she would work weekends,” he said.
The couple ended up making the hard decision to sell their home, which fetched $750,000 — only $30,000 more than the $720,000 they originally paid.
The small profit helped cover the standard costs of selling a home, and they downsized to a townhouse with a more manageable mortgage.
The family had to sell their Brisbane home. Picture: Supplied
Dominic Beattie, money expert at Infochoice, said Millennials are the demographic being most impacted by rising interest rates.
“With over 57 per cent of millennial mortgage-holders spending more than 30 per cent of their household income on mortgage repayments, this generation will be feeling the pinch of rate rises the most,” he said.
Mr Beattie pointed out that many young borrowers took on large home loans when rates hovered around 3 per cent or less.
“Now rates are double that, and we’re seeing the stress on these young families taking its toll, with many having to reduce family activities, which can lead to more family arguments,” he said.
Mr Beattie said that rising interest rates are driving people to refinance their home loans in a desperate attempt to save cash.
“Whether that’s to get a lower rate, take out a fixed rate, extend the loan term or release equity,” he said. “External owner occupier refinancing — that is, loans moved from one lender to another — hit an highest of over $14.1 billion in May.”
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