Victorians stuck in 'mortgage prisons' are putting their homes up as holiday rentals, starting second jobs, giving up maternity leave – realestate.com.au
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Victorians locked in mortgage jails as their homes lose value and interest payments chew up their savings are coming up with creative solutions.
Victorians trapped in “mortgage prisons” are listing their homes as holiday rentals, renting out spare rooms and ending maternity leave early in desperate bids to pay off their mortgages.
Airbnb found that more than 40 per cent of Aussies open their doors to holidaymakers to hang out in their homes.
Meanwhile, mortgage brokers said falling house prices were forcing others to refinance their loans and take second jobs or cut their time with new jobs as the Reserve Bank kept the country's cash rate at 4.35 per cent – the highest level since 2011. since
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Victoria hit a seven-year high in calls to the National Debt Helpline in 2024.
More than 35,500 Victorians sought financial advice last year, nearly 10,000 more than the 24,532 who called for help in 2021 amid the pandemic.
The number one reason for the calls was difficulty paying off the home loan.
Airbnb Australia country manager Susan Wheeldon said a survey of Australians hosting on the website showed 73 per cent did so to cope with rising living costs, while more than 40 per cent said it helped them stay in their homes.
A three-bedroom Camberwell unit rents for upwards of $400 a night on Airbnb.
The house is in a leafy area that attracts many guests.
“Hosting is an economic lifeline for many amid the housing crisis, with 40 per cent of Aussie hosts saying the money they earn from Airbnb helps them stay in their home,” Ms Wheeldon said.
He also noted that Melbourne's sporting pedigree was key in attracting extra funds for struggling landlords, with the Australian Open and AFL matches generating high demand, while the city's major events calendar helped fill houses and rooms.
Last year, they recorded a 300 percent increase in searches triggered by a Taylor Swift concert.
Airbnb also strives to connect experienced hosts with newer ones through the Co-Host Network to help more people earn extra income through the Co-Host Network.
Shared home group FlatMates.com.au has seen a significant increase in the number of people offering a spare room since the country's interest rates began rising in May 2022.
Claudia Conley, the firm's product manager, said almost 40 percent of those offering rooms for rent are live-in landlords, and a third of them have been listed on the site for less than a year.
A five-bedroom Burwood East home that sleeps up to 10 guests costs upwards of $700 a night.
A suburban home is a successful rental.
“And we've seen an increase in the number of women over 55 – many of whom are likely to be divorced and not as well off financially as their partners,” Ms Conley said.
“So renting out a room can support a mortgage.”
Smart Lending director Melissa Gielnik said young Victorians who bought a home anywhere between 2018 and 2021 were bearing the brunt of the property pain and were turning to second jobs to cope with the most stress.
Ms. Gielnik said one in four people she spoke to now was in “mortgage jail.”
“You have a mortgage and you can't refinance and consolidate because the house is worth less than you paid,” Ms. Gielnik said.
“They may have bought it for $700,000, but the payments now compared to then – that's $1,000 different and shocking for the average family in a month.”
A Doncaster East townhouse that can earn its owners more than $300 a night.
The three-bedroom house has become popular on Airbnb.
He said that while many are holding out hope for a rate cut later this year, it may not be enough for everyone.
“I feel like everyone is holding their breath, waiting for rates to come down,” Ms. Gielnik said.
“And I'm not sure that they're going to go down more than 1 percent in the next two years … and I don't know that it's going to be enough to have the impact that people think.”
In one example, he said a graphic designer adds about $30,000 to his annual income by doing after-hours design work, while a social media specialist he works with adds $1,500 to $2,000 a month to his income by freelancing in the space. outside of their daily routine.
Jacob Decru, director of Loan Market Connect, said high home loan rates meant some young mothers ended their maternity leave sooner than expected, while others returned to work three or four days a week instead of the two days they had planned.
Mr. Decru said that in some cases, different lenders will appraise homes at higher prices, allowing owners to refinance and extend the loan term to lower monthly payment costs today — even after the current lender says no.
A three-bedroom townhouse in St Kilda regularly rents for upwards of $395 a night.
Off-street parking has made it popular with families as well as tradies working on nearby projects.
“We had prices on a house at $820,000, $830,000, then a bank had $920,000,” Mr Decru said.
For others, even the higher valuation didn't generate enough capital for them to refinance.
“Those people are saying, 'When will this interest rate cut take place?' are the ones who think,” said Mr. Decreux.
“So there are customers that we can't help right now. They just need to be more budget conscious.”
VICTORIAN CALL FOR FINANCIAL HELP
2024 — 35,562
2023 — 32,874
2022 — 24,653
2021 — 24,532
2020 — 30,215
2019 — 34,883
2018 — 33,379
2017 — 33,795
Source: National Debt Hotline
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