Nearly a third of Australian households suffer mortgage stress – study

by Gerv Tacadena08 Jan 2018
If the latest figures from the Digital Finance Analytics are anything to go by, then it would seem that more and more households in Australia are suffering mortgage stress.

According to the research firm, 921,000 households are estimated to be under mortgage stress in December, up from the previous month's 913,000. This equates to 29.7% of households. Looking at the data closely, the number of households in severe stress climbed from 3,000 to 24,000.

Digital Finance Analytics' regional analysis shows that New South Wales had the highest number of households under mortgage stress, climbing from 251,576 in November to 258,572.

A household is considered under mortgage stress when its net income is not able to cover ongoing expenses.

Digital Finance Analytics principal Martin North said the number of households affected is economically significant, given that the household debt continues to rise to new record levels.

"Mortgage lending is still growing at three times income. This is not sustainable," he said, noting that the latest household debt-to-income ratio is now at a record 199.7.

While measures are put into place to strengthen lending standards to protect new borrowers, North said there are now many households currently holding loans which would not be approved. North said this is a significant sleeping problem and such risk in the system is more aggravating than many think.

Meanwhile, households with interest-only and investment loans have seen higher rates compared to those owner occupied borrowers.

"We expect some upward pressure on real mortgage rates in the next year as international funding pressures mount, a potential for local rate rises and margin pressure on the banks," North said.

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  • by really 8/01/2018 9:58:16 AM

    Why does Australia Broker give this website / person any air time? This is just rubbish that is being rehashed and needs to be called out as such, just because this website keeps saying it, does not make it true.

    To quote this article "A household is considered under mortgage stress when its net income is not able to cover ongoing expenses" so 29.7% of households under mortgage stress is first world BS! How about a quick check of the RBA default rates and arrears, but hey why let the facts get in the way of a headline. Australia Broker needs to being calling out these crack pots, asking questions about how they got there data, sample size and a little of fact checking & questioning.

    Stop just reprinting his media releases and calling it news!

  • by Regional Broker 11/01/2018 9:29:57 AM

    This report contradicts the commentary released late last year from the Mortgage Insurers and ratings agencies that confirmed there was little to no increase in arrears in key areas and a drop in some arears . To me this report seems to be lacking in research and may be driven by some computer modeling , please stop giving this group time its nonsense.

    Maybe you need to look at the data behind the reports before reprinting his rubbish.

  • by Dean Lyons 11/01/2018 1:07:25 PM

    I agree with the two comments listed. This site needs to lift its game to more genuine hard hitting articles, not fear monger articles with no actual real data to back it up.

    There is so much happening in the mortgage industry which is tightening up lending criteria to the point of getting ridiculous ( example: discretionary spending being part of the living expenses), these types of BS articles do nothing to assist with getting this balance right.

    If people are under mortgage stress now, it has zero to do with interest rates and more to do with their own discretionary spending and budgeting (excluding those who may have recently had a life changing event of course).

    Australian Broker if you have nothing of value to print then don't print anything.