The mortgage cliff is coming and there are early signs that cash-strapped Aussies are rifling their super to make loan repayments and other life-threatening costs. And what’s even more worrying is that a lot of the scary data of super withdrawals began before the Reserve Bank started raising rates!

The Australian reports that ATO information says “…in 2021-22 there were 56,400 applications made, and 34,400 approved totalling $573 million. Of that, $8.9 million was for mortgages, but it was before the Reserve Bank interest rate rises.”

To get a take on what’s happening now that we’ve had 11 interest rate rises, Australian Retirement Trust (which has $240 billion worth of super fund members money under its management) has received 600 withdrawal requests in March alone. When people discover they can use their super to avoid losing their home, the requests for super help are bound to surge, as the switch time from low fixed rate home loans to high variable rate loans kicks in. This is expected to happen in the second half of this year and beyond.

Not surprisingly, the age group of people making the requests are in the mortgage belt of 30- to 50-year-olds.

The ATO insists you can only get into your super for very good reasons, which it calls compassionate grounds. These must relate to the super fund member or a dependant. Here they are:

1. Medical treatment or transport.
2. Mortgage repayments to prevent the forced sale of a home.
3. Modifying a home or vehicle to accommodate a severe disability.
4. Palliative care.
5. Expenses associated with death, funerals or burials for dependants.

You do need supportive documents and you can apply using the ATO Online Services website, but you can also go directly to your super fund if you have severe financial hardship.

Going to your super should be a last-ditch action. Before that, anyone in trouble with their loans should talk to their lender, see a mortgage broker, do a budget and cut expenses, look for a second job, rent a room on Airbnb or think outside the square to either get income or kill costs.

Getting money out of super isn’t easy. You must show your situation needs a super rescue.

These early signs of home loan worriers using their super to make payments is an anecdotal reminder that the RBA must be careful about future interest rate rises.