Lendi chief operating officer Sebastian Watkins says the mortgage outlook is already “extremely worrying”.
”. That is, loans written when interest rates were at record lows, where borrowers will struggle to meet higher repayment thresholds.
The country’s mortgage outlook is already “extremely worrying”, but could still “get worse if the RBA continues to hike rates”, says Lendi chief operating officer Sebastian Watkins. “This data accounts for the borrower’s wage and cost of lifestyle at the time of settlement, it paints an extremely grim picture of the strain rising rates is putting on Australians,” Mr Watkins said.
If borrowers were to miss payments, Mr Watkins said it could leave them in a “mortgage prison”, unable to refinance to a lower rate because they would breach key stress testing criteria for lenders, and fail to qualify for an exemption because they are not a model borrower.Lenders must stress test borrowers on interest rates 3 percentage points higher than their current level, per regulatory guidelines.
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