Households to feel the pinch on mortgage and rent payments
Rent and mortgage stress are on the rise, according to a new survey.
The finder.com.au Monthly RBA Survey has found 58% of expert respondents believe rent and mortgage stress is set to rise in capital cities. The result comes off the back of Census data showing 22% of Sydney households are spending more than a third of their monthly income on rent.
Mortgage stress appears to have fallen over the last year, with interest rates still near record lows. A Roy Morgan survey in June found 16.8% of mortgage holders could be considered at risk of facing some degree of mortgage stress, compared to 18.4% the previous year.
However, high levels of household indebtedness have prompted warnings that mortgage stress could become a reality should rates begin to rise. Federal Reserve Bank of San Francisco president John Williams said this week that rate hikes could be “very costly” to the economy, The Australian Financial Review has reported.
Williams warned that trying to control house prices with rate hikes could have “very unfavourable trade-offs when you’re trying to control either a debt build-up or a housing price build-up or a stock market build-up; high costs in terms of unemployment and inflation”.
While rates do appear likely to rise, the Reserve Bank is tipped to keep the official cash rate on hold at its next meeting. All 34 experts surveyed by finder.com.au predicted the official cash rate will remain on hold at 1.50% when the RBA meets tomorrow.
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