Home owners in mortgage “burden”

New research shows borrowers feel home loans limit their lifestyle

Home owners in mortgage “burden”


By Rebecca Pike

Findings of a study suggest more than half of Australians feel their home loans are a burden that limits their lifestyle.

According to Gateway Bank’s survey, 56% of Australians felt stressed about their mortgages. The highest figure was in Adelaide, where 63% considered their loans to be a burden.

Sydney had the lowest amount of mortgage stress with 54%, followed by Melbourne with 58%, Darwin and Brisbane each with 61% and Perth with 62%.

Paul Thomas, CEO of Gateway Bank, said he believes these findings reflect the consistent increase in household debt across the country. He pointed to the Reserve Bank of Australia’s recent commentary warning of rising mortgage stress levels across the nation.

Thomas said, “In the pursuit of getting their foot into the property market, some Aussies have become over-indebted, leading us to record high household debt-to-income ratios of 189%.

“Add to this the steep decline in household savings, which is currently at one per cent, and you have yourself a recipe for mortgage stress.”

The results also indicated a shift towards an alternative means of property ownership – rentvesting.

This year, almost one in ten of those surveyed were renters who also owned investment properties. Half of those who identified as a rentvestor were millennial, 38% were Gen X and 10% were baby boomers.

Thomas attributed the popularity of rentvesting to increasingly strict lending restrictions and a desire for more affordable routes of property investment, but he warned people against entering down the path without the proper knowledge required to succeed. 

He added, “The Australian property market is flat lining for the first time in years and lending restrictions are tighter than ever before, so savvy Aussies are looking for other ways to get a foothold into the great Australian Dream.

“It seems that for almost 10% of Aussies, rentvesting has presented an opportunity to enter the property market.

“However, prospective rentvestors should be wary before going down this path, as it does require a lot of consideration.

“When we look at data from our study this year rentvestors are under a greater deal of stress than the general mortgage holder population, which is just a small indication of the challenges presented by rentvesting.”

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