A recent survey by NEWS.co.au and Core Data has revealed that homeowners have cut back on both necessities and luxury items in an effort to cope with rising interest rates. The survey was conducted over 2331 respondents most of whom said they were cutting spending to keep up their mortgage repayments and clearly considered selling up as a last resort.
The survey found that if home loan rates keep rising 47 per cent of property investors and a third of homeowners would be forced to sell up.
But it's not just fun stuff going by the wayside. Some readers reported they had already cut back on groceries, extra-curricular activities for their children as well as financial basics such as insurance and emergency savings.
One homeowner, whose mortgage repayments have risen by $400 a month in the past two years, seemed to sum up the experience of many other cash-strapped respondents.
"I can no longer provide luxuries to my family and shopping is tightly budgeted. My children can't pursue outside school interests due to us not having the money to pay for it, and worst of all some basic necessities such as home, motor and health insurance have all been cancelled to ensure the mortgage is paid month in and out."
For some, the situation is already desperate. "There are days I don't eat so my kids can. And my husband is taking on extra work to make payments."
"All this talk of people spending money... well it sure isn't us. We sleep on the floor on air beds because we can't afford a mattress. It's definitely not worth the pain of buying a house, much better to rent."
Banks were unpopular with most respondents, with 70 per cent thinking they were not justified in raising home loan rates beyond official hikes made by the Reserve Bank.
"I'm absolutely disgusted by the greed shown by banks... .Our Government has become a useless player in managing and promoting a competitive banking environment," was one response.
With the focus firmly on meeting mortgage repayments emergency savings and insurance have fallen by the wayside.
"We've been drawing on savings to get by, which moves us from being in a comfortable position, to just managing," was just one comment from dozens of people who'd given up on a rainy fund.
Many others had cancelled insurance policies, adopting a fingers-crossed attitude that accidents or illness won't send them further into financial trouble.
What to do if you're falling behind in repayments?
According to the RBA, only a small percentage of people who fall behind in their mortgage repayments have their houses repossessed. Most eventually dig themselves out of their financial hole and manage to get back on track. Here are some tips on what to do if you are falling behind.