Homeowners forced to cut back on Christmas spending to keep up with mortgage repayments – realestate.com.au

The holidays are quickly turning into a financial cliffhanger as households choose between putting presents under the tree or keeping the bank at bay.

New research from Money.com.au More than half of Australian homeowners feel the festive season is too tight to comfortably manage both their mortgage repayments and Christmas spending this year, underscoring the extent to which household budgets are under pressure.

Of those under pressure, 37 percent plan to cut back on Christmas costs to keep mortgage costs under control.

Another 10 percent expect to rely on credit cards or buy now and pay later to get through December.

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A smaller cohort faces the risk of falling behind, with 4 percent fearing they will miss a repayment and 1 percent preparing to take a repayment holiday or seek support from their lender.

Money.com.au mortgage expert Debbie Hays says many households are heading into the festive season with rising costs and mortgage pressure hanging over their heads.

“Christmas is generally a wonderful time for families, but for mortgage holders it is also a financial stress test,” she says.

“Even with interest rates being cut by the RBA this year, many homeowners will have to make a trade-off between keeping up with their mortgage and maintaining their usual levels of festive spending. Christmas is often difficult to cut back on when there are children, family traditions and social pressures involved.

“Some mortgage holders will simply scale back their Christmas spending, while others will rely on credit cards or BNPL services, or in some cases seek support from their bank.

“Lenders may receive more hardship requests over the Christmas period due to increased spending pressure.”

The survey found that only 49 percent of homeowners can comfortably afford both Christmas and mortgage repayments this year.

Gen Z (61 percent) and baby boomers (57 percent) are more likely to struggle to pay for both Christmas expenses and their mortgage.

Gen X and millennials like Sarah Falls are expected to be the hardest hit when it comes to financial choices this Christmas. Image: TikTok

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Ms Falls, an influencer and mother of three, got tired of spending thousands of dollars on Christmas presents for her children, but saw them lose interest in the toys a few days later – so she bought them at a thrift store. Image: TikTok

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This is followed by 52 percent of Millennials and 46 percent of Gen X reporting the same.

It means some people will be forced to start saving for Christmas presents this year, with influencer and mother-of-three Sarah Falls making headlines on the subject last year.

With a budget of $150 for each of her children, Falls documented her thrift store adventures on TikTok for her 23,000 followers and was “surprised” by the treasures she found.

“My children can’t live without it. They are very lucky. I wanted to buck the norm and be more sustainable while supporting non-profits,” the Northern Territory mother said news.com.au.

Five tips to combine your mortgage and Christmas expenses

1. Prioritize your mortgage payments

Before thinking about how much you’ll spend at Christmas, make sure you can afford to pay your mortgage repayments in December and January 2026. Defaulting on your home loan – even once – can rack up costs and damage your credit score, and it can make refinancing much more difficult down the road.

2. Check your mortgage interest rate

If it’s been more than a year since your last rate review, it’s worth speaking to a broker. By getting a lower interest rate on your mortgage, you can reduce your repayments and free up extra cash flow. Debbie says agents often have direct relationships with lenders, meaning they can negotiate better rates and faster approvals on your behalf before Christmas.

3. Be careful with credit cards and BNPL

Using credit cards or BNPL to get through Christmas can cause longer-term financial stress. If you do rely on it, set clear repayment limits and avoid stacking multiple BNPL services at once. BNPL services are now treated as credit products, meaning missed payments can affect your credit score.

4. Talk to your lender early if you’re struggling

Banks have hardship teams who can temporarily adjust your repayments or offer alternative arrangements. Contact your lender as soon as you think you will not be able to meet your repayments, even for a short period. The sooner you contact us, the more options you have. This could include postponing your repayments or temporarily reducing the repayments. A temporary hardship arrangement will not affect your credit score.

5. Ask for a refund holiday

With some home loans you can pause or reduce the repayments if you have previously made additional repayments. If your mortgage offers this option, it can provide temporary relief during the holidays. Just keep in mind that interest will continue to accumulate during the pause, which can add to your overall borrowing costs.