As thousands of Australians face financial stress, the interest rate rise threatens to make it “sleepwalk into trouble”.

The head of Australia’s peak finance and broker organization for mortgages warned that Australians “are sleepingwalking into disaster”, because any increase in interest rate would cause financial stress for thousands.

Peter White AM, managing director of the Finance Brokers Association of Australia, was unwavering in his belief that McCrindle’s recent research had shown that many borrowers could be living beyond what they can afford.

The research was commissioned for the FBAA. The research found that 66% of borrowers would feel pressure if interest rates rise, while 57% would not have the ability to make monthly payments if their mortgage increased $300 per month.

White stated that many Australians are on the edge and sleepingwalking into catastrophe. They live in false hope of low interest rates.

“This survey is a wake-up call and shows that even a small rise in rates – which is looking more likely next year with rising inflation – could be catastrophic for our nation.”

White has been in the business for over 40 years. He suggested that Australians may have become complacent as they have not seen a rate increase for almost 11 years.

White stated that the housing market had experienced a boom and that it is possible for it to recover. People with low deposits and large repayments could end up with negative equity. They may owe more on the property than its value.

“Add to this a mortgage payment they are unable to afford, and it could lead to many people in real trouble.”

A third of those who said that they would not have enough money to pay their mortgage repayments following a $300 monthly rise were households with incomes between 2000 and 3000 per week. This shows that mortgage stress is not just for those with lower incomes.

“Where can these people go, if their home becomes unsafe?” “Public housing, streets?” He inquired.

“Low income earners have limited options, and this will have an impact on society, most likely due to the COVID economic struggles.”

White urged the government to not raise loan rates. He also advised Australians not to take out mortgages that would require them repay with credit cards or personal loans.

Australia’s current interest rate is 0.1%, a historic low level after numerous cuts to the cash rates during COVID-19.

White called it “overheating” because of the prolonged absence of the real estate market, the combination of cashedup workers, historically low rates of interest, and cashedup workers.

Digital banking expert from Compare the Market David Ruddiman said the fear of missing out – dubbed FOMO – is a powerful motivator.

“Buyers were scared off by forecasts that prices would rise,” Ruddiman stated. Ruddiman stated that they are fulfilling the prophecy in certain ways by making bigger offers than usual.

“The data shows that fear is a key driver for trends. 63% of respondents said they bought as quickly as possible to avoid rising prices.

“Looking at recent price increases, this strategy could have paid off because of even greater capital gains. It is crucial that people are prepared to deal with future rate increases and inflation.

Australia’s housing costs are increasing at an alarming pace. They have risen 17.6% in the first nine month 2021, the fastest rate since June 1989.

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