Legal Aid WA says help is available for homeowners following interest rate hikes, mortgage stress

Legal Aid WA is urging homeowners struggling to pay their mortgage amid rising interest rates to apply for a hardship variation to their loan, as major banks expect another hike.

Following 11 interest rate rises since May 2022, Legal Aid WA says major banks are predicting rates to increase again when the Reserve Bank meets on Tuesday.

Legal Aid WA civil law director Gemma Mitchell told the Geraldton Guardian the interest rate environment had changed considerably over the past year, but many homeowners were yet to feel the full effect of rate increases.

“The unique circumstances of the COVID-19 pandemic and historically low interest rates in the pre-COVID period made home ownership a possibility for more Western Australians,” she said.

“The interest rate environment has changed dramatically since then, and those home buyers will face a dramatic increase in mortgage repayments as they come to the end of fixed-term rate periods.”

Ms Mitchell said it was important for people to act quickly and not put their head in the sand if there were problems making mortgage repayments and directed regional homeowners to Legal Aid WA’s Mortgage Hardship Service.

“We can provide free legal advice on mortgage hardship, credit law matters, and debts such as strata title fees or council rates,” she said.

The service can provide people with mortgage stress — the case when a household is spending more than 30 per cent of its total pre-tax income on mortgage repayments — with information on their rights, obligations and legal options.

On Thursday, Treasurer Jim Chalmers indicated he believed there could be a break from interest rate hikes, noting the RBA would be “weighing up the fact that inflation is moderating in our economy”.

Inflation decreased by 1.2 per cent to 5.6 per cent in the year to May, led by decreasing petrol prices, figures revealed on Wednesday.