When the cost-of-living hits home

As interest rates increase and the cost-of-living rises, many are feeling the financial squeeze. Whether you are trying to save for your first home, managing an existing mortgage, or reassessing your finances, the current environment can feel challenging.

While there is no single solution, there are practical steps borrowers and aspiring homeowners can take to regain control, reduce pressure and make informed decisions.

The current landscape

We’ve seen increases in interest rates as the Reserve Bank sought to curb inflation. At the same time, parts of the property market across Australia are softening, creating additional uncertainty for buyers and homeowners alike.

For those entering the market, saving a deposit has become more challenging and existing homeowners may also be feeling the pressure.

In this environment, planning ahead, and seeking expert guidance has become more important than ever.

Saving for a home loan in a tough market

For first-home buyers, the dream of home ownership can feel increasingly out of reach. However, there are still ways to work toward a purchase, strategically and sustainably.

Focus on financial foundations

Lenders are looking closely at spending habits, savings history, and overall financial discipline. Establishing consistent savings patterns, reducing unnecessary debt and maintaining a clear budget can strengthen a future loan application.

Even small changes to discretionary spending can make a meaningful difference over time. Automating savings, consolidating debts and regularly reviewing household expenses can all help buyers build momentum toward a deposit.

Understand borrowing capacity early on

Many prospective buyers wait until they are ready to purchase before speaking with a lender or broker. However, understanding how much you can borrow early in the process can help shape more realistic goals and timelines.

We can help assess current financial circumstances, explain how lenders evaluate applications and identify steps that may improve borrowing power over time.

Be cautious with low deposit loans

Low deposit loans can help buyers enter the market sooner, but they also carry risks that should be carefully considered, particularly in a declining or uncertain property market.

Borrowers with smaller deposits may face higher, or additional costs, including lenders mortgage insurance (LMI), and reduced equity buffers if property values fall. In some cases, declining property prices can leave borrowers vulnerable to negative equity, where the loan amount exceeds the value of the property.

This does not mean low deposit loans should be avoided entirely, but buyers should be aware of and fully understand the long-term implications if circumstances change.

Managing an existing home loan

For current homeowners, many lenders will have passed on the recent interest rate hikes and repayments will have increased. Many borrowers are now reassessing their finances and looking for ways to ease the pressure.

Review your loan regularly

One of the most common mistakes borrowers make is staying on the same loan for years without reviewing whether it still suits their needs. Interest rates, lending policies and loan products change regularly. A loan that was competitive several years ago may no longer offer the best value. Reviewing a mortgage periodically can uncover opportunities to reduce repayments, access better features or refinance to a more suitable structure.

Speak up early if you are struggling

Many borrowers wait until they are in financial hardship before seeking support. However, lenders are generally more willing to work with customers who engage early. Options may include temporary repayment adjustments, loan restructuring or hardship assistance arrangements. Being proactive can help prevent short-term financial stress from becoming a more serious issue.

Getting help

In a complex and changing lending environment, navigating the market alone can feel overwhelming. Mortgage brokers play an important role in helping borrowers understand their options and make informed decisions.

We compare products and policies across a range of financial institutions. This can be particularly valuable when lending criteria tighten or circumstances are more complex. We can also explain the differences between different loan products in plain language, helping borrowers understand both the opportunities and potential risks involved. Beyond securing a loan, ongoing reviews and support can also help ensure borrowers remain on a competitive and suitable product as their circumstances evolve.

Economic cycles are a normal part of the property and lending landscape, but that does not make them any less stressful for households feeling the pinch. While rising interest rates and cost-of-living pressures may continue to challenge Australians, the right support can help borrowers navigate uncertainty with greater confidence.