Mortgage stress on the rise for Australian households

Posted: 29 September 2017 12:02 pm

house squeeze handLow home loan rates don’t seem to be easing the pain for stressed borrowers.

New research from Roy Morgan has revealed a rise in the proportion of borrowers experiencing mortgage stress. The figures show mortgage stress affected 17.3% of borrowers in July, up 0.3% from the same period last year. This rise came in spite of falling mortgage rates, with the average standard variable rate falling from 5.40% in July 2016 to 5.25% in July of this year.

The rise in mortgage stress affected those deemed both “At Risk” based on their original borrowing amount and those categorised as “Extremely At Risk” based on the balance outstanding on their home loan. In the three months to July 2017, 17.3% of mortgage holders were deemed “At Risk”, while 12.8% were labelled “Extremely At Risk”.

Roy Morgan attributed the rise in mortgage stress to slow growth for median household incomes. Over the last year, the median household income of mortgage holders grew by only 2.0%, Roy Morgan said, which was well behind the 7.4% rise in the median amount borrowed and the 13.1% rise in the median amount outstanding.

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Roy Morgan industry communications director, Norman Morris, said when rates rise, the number of home loan borrowers is likely to fall, but those who have home loans are likely to face increased levels of mortgage stress.

“The final impact, however, will also be determined by what happens to household incomes, which are currently showing very modest growth,” Morris said.

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