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One bank is seeking to start a conversation about “redefining” the Australian dream of home ownership, after its research revealed the “extreme measures” some borrowers undertake to make home loan repayments.
Digital-only bank UBank released research earlier this week that suggested many Australians are “chasing a dream” that may be out of reach for them financially.
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UBank chief executive officer Lee Hatton said that the bank’s nationwide research uncovered some “quite alarming” results, showing that Australians are working too hard to pay off mortgages that they can only just afford and subsequently not living comfortably.
“One in four Australians admit they were financially stretched in relation to meeting their mortgages and as a result, they’re sacrificing their personal and social lives,” Ms Hatton said.
The research found that more than half (56 per cent) of mortgage holders skip spending time with family in order to work more to pay for their mortgage.
Further, 50 per cent said they could see their repayments taking a toll on their social life, declining at least two social outings a month in order to meet mortgage repayments.
“UBank wants Australians to borrow less and live more in order to find balance and ensure they’re happy and not crippled by financial stress,” Ms Hatton emphasised.
She noted that the research showed 85 per cent of Australian homeowners have at least one unused room in their house and of that 85 per cent, nearly two-thirds (58 per cent) admitted they could live without the extra space.
“What we are seeing are people buying houses or ‘the dream’ which is too big for their needs,” Ms Hatton said. “It can be nice to have a bigger house, but at what cost? Is it worth getting rid of the extra room and downsizing to get a smaller mortgage?”
Ms Hatton emphasised that according to the research, for those financially stretched by their mortgage 80 per cent wish they could spend more time in their home.
“[This] indicates that they spend more time working to pay off the house, rather than spend quality time in it,” she concluded.
“What we do know is that financial stress and worrying about your mortgage isn’t what life should be about. If we could all borrow less and live more, there’s no doubt our happiness and wellbeing would be better off,” she said.
More ‘home truths’ from UBank’s research
When asked to rank the top five actions they would undertake to help pay off their mortgage if circumstances changed, 26 per cent of respondents cited: ‘do your own home maintenance and repairs’.
• This is closely followed by ‘extreme power saving at home’ (24 per cent).
• 32 per cent with two or more unused spaces/rooms would rent out a room
• 17 per cent with children aged under 18 would pull their children out of childcare
• Only 7 per cent would give away their pets, as they are seen as part of the family
[Related: 1 in 3 FHBs save for more than 5 years for home deposit]
