Mortgage debt for aging Australians up 600%

Worrying trend may lead to longer working lives or the use of superannuation to pay down loans

Mortgage debt for aging Australians up 600%


By Madison Utley

Research published yesterday has revealed that mortgage debt for Australians aged 55 years and older has ballooned by 600% over recent years.     

Between 1987 and 2015, average real mortgage debt among older Australians soared from $27,000 to more than $185,000, while mortgage debt to income ratios tripled from 71% to 211%, according to the Australian Housing and Urban Research Institute (AHURI).

“Our research finds that back in 1987, only 14% of older Australian home owners were still paying off the mortgage on their home; that share doubled to 28% in 2015,” said Professor Rachel ViforJ of Curtin University, the report’s lead author.

“We’re also seeing these older Australians’ mortgage debt burden increase from 13% of the value of the average home in the late 1980s to around 30% in the late 1990s when the property boom took off, and it has remained at that level ever since.

“Over that time period, average annual mortgage repayments have more than tripled from $5,000 to $17,000 in real terms,” she added.  

Higher mortgage debts later in life present challenges for the government and its retirement incomes policy. One of the “increasingly likely outcomes” of the trend revealed by the research is Australians being forced into longer working lives.

The research also suggested that older mortgage holders are prepared to burn through their superannuation to bolster the wealth stored in their home equity through paying down their mortgages.

However, it highlighted that superannuation balances being allocated towards paying off debt rather than towards sustaining spending in retirement will increase the pressure the age pension system, and do so at an increasingly rapid rate as growing numbers of Australians retire with significant debt still owed against the family home.


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