What is meant by mortgage prisoner?

As the Reserve Bank of Australia (RBA) decided to hold the cash rate steady at 3.6%, many homeowners and investors are feeling trapped in their mortgages. These "mortgage prisoners" are unable to refinance or switch to a better deal due to changes in lending criteria and buffer rates, leaving them stuck with high interest rates and repayments that are eating into their budgets.

Mortgage prisoners are typically homeowners or investors who took out a mortgage when lending criteria was more lenient, and have since been unable to refinance due to changes in their financial circumstances, the value of their property falling or tighter lending regulations. The buffer rates imposed by the Australian Prudential Regulation Authority (APRA) mean that lenders must assess a borrower's ability to repay their loan at a higher interest rate than the current market rate, making it more difficult for borrowers to qualify for a loan or refinance.

It's important for homeowners and investors to regularly review their mortgages and compare their options, even if they don't plan on switching lenders. By staying informed and understanding their current financial situation, homeowners can make informed decisions about their mortgage and potentially save thousands of dollars in interest.

If you're feeling like a mortgage prisoner, there are a few steps you can take to improve your situation. Firstly, review your current mortgage and assess whether it's still suitable for your needs. If you're struggling to make repayments or want to reduce your interest rate, speak to one of our licensed mortgage brokers who can help you explore your options and potentially negotiate a better deal on your behalf.

• Disclaimer

  The information provided in this article is intended for general informational purposes only and is not intended as financial advice. While we make every effort to ensure the information is current and accurate, we cannot guarantee its accuracy and completeness. Before making any financial decisions, it is important to consult with a licensed professional who can provide tailored advice specific to your individual needs and circumstances.