Analysis: “Mortgage Prisoners” – What the data say

Mortgage Prisoners?

Mortgage Prisoner: mortgage holders who will be unable to change lenders to get more competitive interest rates due to no longer being able to pass financial assessment for a mortgage in a higher interest rate environment.

The recent SMH article on ‘mortgage prisoners’ cites research by Jarden’s chief economist which states there are “hundreds of thousands” of these customers at risk of facing difficulties refinancing. However, the article ends by citing RBA’s analysis that the majority of households can cope with rising interest rates.

The majority of households have access to additional savings

Recent UBS analysis based on a survey of households, shows, like the RBA, that the majority of mortgage holders have access to additional savings in case of interest rate increases.

Like they RBA, they also acknowledge that there is a small segment of consumers who will have difficulty making higher interest rate payments, but these are a minority.

A minority of customers will become ‘mortgage prisoners’

So there will be people who struggle, but at this point there is no analysis that indicates widespread doom and gloom for mortgage holders.

Fixed rates will expire in two stages: Dec 23 and Dec 24

Also useful from the UBS report is their analysis of when fixed rate loan terms will be expiring for the four majors.
The majority is due to expire by Dec-24, with around 50-65% expiring by Dec-23.

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