The risk associated with the ‘fixed-rate cliff’ for the Australian property market is somewhat uncertain, therefore I drilled down into what we DO know.

Here are five things I learned about keeping the ‘cliff’ in perspective:

Beginning in April 2023, the suffering will be intense. Not only is most fixed lending scheduled to expire this year, but average loan sizes began to rise substantially beginning in April 2021.

Variable borrowing has a lot to teach us. Most outstanding mortgage debt has already been exposed to higher rates, but so far there are few evidence of forced sales, and some borrowers are still making additional payments into redraw and offset accounts.

Variable rates are rising, but they might also fall. Several experts predict that the cash rate will be cut by the end of the year, giving variable mortgage holders additional freedom to take advantage of lowering rates.

Most markets’ equity remains high. While the property market is in a downturn, CoreLogic estimates that only 2.9% of suburbs have dropped more than 20% from their peak.

It will take time to see results. Mortgage anxiety is hard to measure. Official data on late mortgage repayments is only available up to September, and repayments that are 30 days or more late will take some time to filter through the data. Furthermore, the banking industry has already collaborated with borrowers to keep roofs over their heads (remember mortgage payments deferrals? ), and they will do so again!