Nearly half of mortgage holders report repayment stress

Adam Smith 5 February 2018

house squeeze handMortgage stress is set to worsen as households face rising living costs.

The ME Bank Household Financial Comfort report has found that 56% of households are contributing more than 30% of their income toward their mortgage or rent. The report found 72% of renters spend more than 30% of their disposable income on rental costs, and 46% of mortgage holders spent more than 30% of their disposable income on their home loan repayments.

The majority of mortgage holders (51%) said they were worried about their household's level of debt. This compared to 27% of households with no mortgage and 23% who own their home outright.

How to manage mortgage stress

ME consulting economist and report co-author Jeff Oughton said the problem of mortgage stress could become more acute.

"Seven per cent of households reported they could not always pay their mortgage on time during the past year, and 7% could not pay their rent on time. Mortgage defaults may escalate if interest rates increase, particularly among vulnerable low-income households already dealing with the rising cost of necessities," Oughton said.

Oughton said households were becoming less comfortable with their financial position, with household comfort at its lowest since mid-2014.

"In fact, ME’s latest report shows many households’ financial situation is getting worse and again the culprit is living expenses, with 40% reporting this as a key reason their situation is worsening. Around 46% of households surveyed also cited the cost of necessities such as fuel, utilities and groceries as one of their biggest worries," he said.

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