The Rise of Interest and Fall of Relationships

Interest rates are continuing to rise. We have had 12 interest rate rises since May 2022 and are likely to have another in the coming months. What does this mean for couples and the impact on marriages?

Many homeowners are hoping that there will be a pause but it seems unlikely. If the RBA decides to continue to raise the cash rate in July then most banks will follow and raise their home loan rates as well. This is continuing to put increased pressure on marriages in making home loan repayments and the payment of general living expenses.

If you are worried about the impact of the rise in interest rates on the payment of your home loan, you can do the following:

1. Review your loan. Research what other rates and loans are on the market.
2. Discuss with your lender about other available options such fixing all or part of your loan. You could even consider asking them for a lower rate if you have seen other rates on offer.
3. Consider switching lenders if you see a more competitive deal.

Unfortunately, these times are placing pressure on many couples leading to the breakdown of relationships and the selling of property. If you are living together in a de facto relationship or married and the mortgage is in both of your names, you need to remember that both parties are liable for the full mortgage repayment must be met. Even if at the moment only one of you pays the mortgage, in the event that things do not work out and you separate, the full mortgage balance will need to be paid. If only one party pays their share of the mortgage and the full repayment is not paid, it will still be recorded as a “missed payment”. This may affect your credit profile.

Banks will sometime consider a deferral or moratorium on payments under hardship circumstances especially when there has been a breakdown of the marriage.  Hardship applications ought to be considered under these circumstances.

Also, upon a relationship breakdown if the mortgage payment is not being met, it may be appropriate to consider making a Court application for an Order requiring a party to make the payments or to liquidate other assets so that funds can be made available for the mortgage payments. 

It is wise to obtain sound Family Law legal advice as early as possible so that all options can be explored and to void the serious consequences that can occur upon the default of mortgage payments.  Our experienced Family Law Solicitors can assist you in all areas of Family Law, contact us on 8525 2700 to discuss your matter with one of our team or click here to request an appointment, remember to mention this article and claim your free 30 minute consultation.

Article written by Shweta Kumar
Photo by Eric Ward on Unsplash