Negative equity risk for nearly 7% of Australian mortgage holders

by Miklos Bolza07 Oct 2016
Across Australia, 311,000 (or 6.8% of) mortgage holders have been found to have little or no real equity in their home, according to a recent report from Roy Morgan.
The report, State of the Nation: Spotlight on Finance Risk, highlighted that this group of property owners is at particular risk if they have to sell or prices decline.
Broken down by state, mortgage customers in Western Australia were most at risk with 9.2% of homes valued less than or equal to the amount owed. NSW was the safest with only 5.1% of mortgage holders in the same situation.
Overall figures for each state found in the report are listed below:
  • NSW (5.1%)
  • TAS (6.1%)
  • VIC (6.3%)
  • SA (6.7%)
  • QLD (7.5%)
  • WA (9.2%)
One of the key trends revealed by the research was that lower value homes tended to face more equity risk. The value of homes owned by mortgage holders with little or no equity was $487,000 across Australia – compared to a nationwide average of $674,000 for all mortgage holders.
This trend was found across all states with figures found in the following graph:

“It tends to be at the lower end which seems to indicate maybe it’s the newer borrowers,” Norman Morris, industry communications director from Roy Morgan Research, told Australian Broker. “These sorts of numbers indicate there are people borrowing right up to the limit.”
While this could reflect on the duty of care that brokers had to customers, Morris said that these trends would present more of a problem if prices go down.
Compared with 2012 however, the figures have improved in the past four years.
“In 2012, the figure was 7.7%. Now it’s 6.8%. I would say that the main reason for that is housing and dwelling prices that they’ve been borrowing on have been going up fast.”


  • by Cubeman 7/10/2016 10:24:45 AM

    "While this could reflect on the duty of care that brokers had to customers, Morris said that these trends would present more of a problem if prices go down."

    Yes, we have a duty of care, but don't forget that we are 50% of market share!!!

    Further, given that the relevant lender completes a valuation and applies LMI to the deal for 80% + LVR - I would suggest that the duty of care is with the buyer rather than the bank / broker who are facilitating the transaction on behalf of the client.

  • by Papery 7/10/2016 11:26:00 AM

    Unless Brokers are suitable qualified, Brokers need to stick to the finance piece....most Brokers are not in position to advise on property. Period.

    Anyway, property prices only ever go up, don't they....????? Buyer be ware.

  • by Emanuel 10/10/2016 11:46:54 AM

    Since the end of the “mining boom” property values dropped.
    Negative equity for West Australian mortgage holder is a reality, a sad but a reality!
    Any refinance enquiry arriving at our office, a valuation is the first step and then we looking into the serviceability
    Mortgage holders with a lending of 80% can be happy if they still have a couple of dollars in asset in their property.
    Properties in the outer Perth, had a value in 2013 of (we say) 420K todays valuation will be in the vicinity of 385K this are facts.
    Cubeman and Papery, Duty of care applies to new deals but the 7% of mortgage holder in trouble refers to refinance, and NO property prices do not ever go up.