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The Myth of the Mortgage Cliff

The Myth of the Mortgage Cliff


It’s a reality of modern life that most of the impending disasters forecast by news media never happen – and that is particularly so in the property industry.

Recent years have been full of startling headlines of a collapse of property prices, including in 2020 when Covid struck Australia and at the beginning of 2023 when bank economists predicted prices would drop 15% to 20% because interest rates were rising.

Journalists love these kinds of “impending doom” stories and are happy to publish scary headlines warning of us of dreadful things to come.

It causes a lot of unnecessary anxiety in a community already struggling with high interest rates, rising prices for life essentials, climate disasters, the outbreak of wars, earthquakes causing devastation and a whole lot more.

Media, of course, never apologises when the disaster they predicted does not occur.

One of the notions very popular with journalists seeking to generate clickbait with a startling forecast is the concept of a cliff. A property market cliff, a property price cliff, a mortgage cliff – according to news media, there are always things about to fall off a cliff.

Except it never happens.

The most popular one in 2023 has been the mortgage cliff. We’ve been told repeatedly to expect the number of people coming off fixed interest rates and having to pay much higher variable rates, would generate an avalanche of loan payment defaults, household disasters and falling property prices.

But it hasn’t happened. 

It was never going to happen, in our view, but now we can confirm that no cliff has transpired – because we’re now well into this phase of transition from fixed rate mortgages and there has been no noticeable uplift in mortgage delinquencies and no reports of households falling apart because of the higher repayments.

Now the same media organisations – which happily published the “impending disaster” headlines earlier in the year – are, in a rather self-righteous manner, criticising the notion that there would ever be a mortgage cliff.

The Financial Review, which has degenerated into one of the worst tabloid rags in the country, recently ran a headline which said “The fixed rate mortgage cliff was a myth”.

The article declared that “the exaggerated fixed rate mortgage cliff has turned out to be a manageable staircase for borrowers”.

It also said: “Previous much-hyped concerns that people rolling off cheap fixed rate home loans could be caught up in a wave of defaults and mortgage arrears have so far proven overblown”.

Yes, indeed, but the Financial Review was one of the worst culprits in generating clickbait headlines about this earlier in the year.

It’s a bit rich to be now adopting the tut-tut “we told you so” tone, now that the hysteria they helped to generate has been proven to be false.


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