Victorians getting locked in mortgage prisons as their homes lose value and interest repayments chew through their savings are coming up with creative solutions.
Victorians trapped in “mortgage prisons” are putting their homes up as holiday rentals, leasing out spare rooms and ending maternity leave early in desperate bids to pay their mortgage.
Airbnb has revealed more than 40 per cent of Aussies opening their door to holiday makers are doing so in an effort to hang onto their home.
Meanwhile, mortgage brokers have revealed falling home values have left others unable to refinance their loan and forced to work second jobs or cut short their time with new bubs as the Reserve Bank keeps the nation’s cash rate on hold at 4.35 per cent — the highest level since 2011.
RELATED: ‘Dreaming’: Why you shouldn’t hold your breath for rate cut
‘No f***ing way’: Portelli reveals Block raffle winner’s decision
Revealed: Worst suburbs for property investors
Victoria hit a seven-year high for the number of calls to the National Debt Helpline in 2024.
More than 35,500 Victorians sought financial counselling last year, about 10,000 above the 24,532 who called for help in the midst of the pandemic in 2021.
The number one reason behind the calls was difficulty paying a home loan.
Airbnb Australia country manager Susan Wheeldon said a survey of Australians putting homes on the website showed 73 per cent were doing so to help them cope with the rising cost of living, while more than 40 per cent said it was helping them stay in their home.
![Camberwell unit Airbnb - for herald sun real estate](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
A three-bedroom Camberwell unit on Airbnb rents for upwards of $400 a night.
The home is in a leafy area that appeals to many guests.
“Hosting is an economic lifeline for many amid a cost of living crisis, with 40 per cent of Aussie hosts saying the money they earn from Airbnb has helped them stay in their homes,” Ms Wheeldon said.
She also indicated that Melbourne’s sporting pedigree was key to helping bring in extra funds for struggling homeowners, with the Australian Open and AFL matches creating high demand, while the city’s major events calendar also helped fill homes and rooms.
They recorded a 300 per cent spike in searches caused by the Taylor Swift concert last year.
Airbnb are also working to pair experienced hosts with newer ones via a Co-Host Network to help give more people access to supplementary income, via a Co-Host Network.
Share house accommodation group FlatMates.com.au has also flagged a substantive rise in people offering up a spare room since the nation’s interest rates began rising in May, 2022.
The firm’s product manager Claudia Conley said almost 40 per cent of those offering rooms for rent were live-in landlords, with a third of them having had a room listed on the site for less than a year.
A five-bedroom Burwood East home that can host up to 10 guests has a nightly rate of upwards of $700.
The suburban home has been a successful rental.
“And we have seen an increase in women over the age of 55 — a lot of them are likely going through divorces and aren’t as financially well off as their partners,” Ms Conley said.
“So renting out the room can be to support the mortgage.”
Smart Lending director Melissa Gielnik said younger Victorians who bought a home anywhere from 2018-2021 were bearing the brunt of the property pain, most taking on second jobs to cope with the strain.
Ms Gielnik said one in four people they were speaking with now were in a “mortgage prison”.
“That’s where you have a mortgage and can’t refinance and you can’t consolidate because the home is worth less than you paid,” Ms Gielnik said.
“They might have bought for $700,000, but the repayments now compared to back then — it’s a good $1000 different and for the average family that’s shocking, for a month.”
A Doncaster East townhouse that can earn its owners more than $300 a night.
The three-bedroom home has been popular on Airbnb.
She said while many were desperately holding on for a rate cut later this year, it might not be enough for everyone.
“I feel like everyone is holding their breath, waiting for the rates to lower,” Ms Gielnik said.
“And I’m not that confident they will drop more than 1 per cent in the next two years … and I don’t know that it will be enough to have the impact people think it will.”
In one instance she said a graphic designer had boosted their annual income by about $30,000 by taking on after-hours design work, while a social media expert she had worked with was adding $1500-$2000 a month to their income by working privately in the space outside of their day job.
Loan Market Connect director Jacob Decru said elevated home loan rates meant some young mums were ending maternity leave earlier than they had hoped to, while others were going back to work for three or four days a week instead of the two they had been planning on.
Mr Decru said in some cases differing lenders would value homes at higher prices, giving owners the wiggle room to refinance and potentially extend the term of their loan to cut back monthly repayment costs today — even after their current lender said no.
In St Kilda, a three-bedroom townhouse regularly rents for upwards of $395 a night.
An off-street carpark has made it popular with families as well as tradies working on projects nearby.
“On one home we had valuations of $820,000, $830,000 and then one bank had it at $920,000,” Mr Decru said.
For others, not even a higher valuation was creating enough equity for them to refinance.
“Those people are the ones hanging on and thinking ‘when is this rate cut coming in?’,” Mr Decru said.
“So there are clients where we just can’t help them at the moment. They are just having to become more budget conscious.”
VICTORIAN CALLS 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 Helpline
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: ‘We’re done’: Breaking Bad house on sale, homeowner is sick of gawking fans
Kyneton: Two historic haunted houses connected to the family of Australian-Indian princess
Graffitied mansion in Melbourne’s southeast nearly sells, among state’s abandoned homes
