Fear, Uncertainty and Extra Mortgage Payments

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High-quality image showing a thoughtful Australian homeowner reviewing finances, symbolising cautious spending and mortgage focus.

Even after recent interest rate cuts, millions of Australian mortgage holders continue pouring extra money into their home loans. Why? Because many are “scarred” — by surging living costs, global turmoil, and the rapid-fire rate hikes of the past few years.

Holding Tight Despite Painful Rates

Although the Reserve Bank held rates steady at 3.85% this week, the impact of 13 hikes since 2022 still lingers. On a typical $660,000 mortgage, borrowers are paying around $14,000 more a year compared to before the cycle began. Despite this, about 90% of homeowners have kept repayments unchanged, even though they could ease up following earlier rate cuts.

In fact, Aussies paid a record $125 billion toward their mortgages over the past year, up from $75 billion before the RBA’s hikes. Additional repayments are also at new highs, with borrowers throwing $45 billion extra at their loans to get ahead.

Scarred by Uncertainty

So why not take a break? Economists say households are haunted by uncertainty. They’re still feeling the sting of volatile petrol and grocery prices, global instability, and economic warnings at home and abroad. Commonwealth Bank notes that many Australians are simply too cautious to dial back repayments, worried about what might come next.

Even after the RBA’s February and May cuts, household savings rose to the highest level since late 2022, reflecting an instinct to bunker down.

Meanwhile, Sydney’s Rental Crunch Worsens

Adding more strain, Sydney’s rental crisis is hitting new extremes. Asking rents now sit at $780 a week for houses and $740 for units, with vacancy rates stuck at a razor-thin 1.1%. Economists warn these tight conditions are dividing society — pushing many families toward poverty or locking them out of home ownership entirely.

Buyers Eye Opportunities

Yet amid caution, new chances are emerging. Price growth in formerly overheated markets like Brisbane, Adelaide, and Perth is slowing, giving buyers more room to negotiate. Meanwhile, Melbourne and Hobart — along with regional pockets in Victoria and Tasmania — are showing early signs of recovery, offering opportunities to buy before the next growth cycle kicks in.

Rodney McLoughlin points out that staying informed and strategic is essential. Whether paying down debt or scouting for value buys in a shifting market, smart decisions now can pay off significantly down the line.


Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 11 July 2025.


Rodney McLoughlin is a trusted real estate professional with deep knowledge of Australian property. For personalised advice, reach out to Rodney today.

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