40% of Australians are struggling to pay back their mortgages

by Mike Wood14 Sep 2021

Over 40% of Australian home owners are struggling to pay back their mortgages at the moment, according to new research by fintech True Savings.

Research found that 1.5 million Aussies were in mortgage stress, clustered around the areas of Sydney that were locked down hardest.

New South Wales and Victoria, the two states under the harshest lockdown measures, had over 40% of their home owners in mortgage stress, with 44.11% in Victoria.

On a local level, areas such as Liverpool and Campbelltown in Southwest Sydney and Casey in Melbourne had over 75% of home owners struggling to meet repayments.

Pete Steel, the ex-CBA head of digital who founded True Savings, said that his start-up had commissioned the research after hearing from customers that they were struggling to pay their home loans.

“We had seen a lot of customers in mortgage stress anecdotally, so we wanted to do some research to help quantify it,” he said. “We looked across the database of 52,000 customers and took a lens of where we saw customers who had outgoings that exceeded income.”

“Quite simply, you might be paying off your home loan and not be in arrears, but it isn’t sustainable because you’re not earning enough income to balance life and pay off your mortgage. That’s what we call mortgage stress.”

“It’s not a sustainable thing for families and can create personal stress and other unfortunate side effects for hard-working families.”

“There are a few reasons why the equation can change. In this environment, it can be due to loss of job or shifting from full-time to part-time work. It could be one of the partners in the household having a baby and taking significant time off work. There’s a lot of reasons why it can happen, and it’s quite widespread.”

“All brokers can help customers regularly check the health of their home loan. Certainly, we see on average about $5,000 a year is saveable – that’s the difference between a customer who is on top of their home loan and one that is on the back book.”

“True Savings has a really easy to access site that allows brokers to connect immediately and help customers understand their situation, and present the options that are available to them.”

“I’d like to think we make it easier for brokers and customers, before they get into mortgage stress, to get the best price they can. If you can save $5,000 a year, that’s a significant household expense.”