One in six Australian mortgage holders suffering from ‘mortgage stress’


New research has revealed that a combination of government assistance and record low interest rates has helped cut mortgage stress to ‘near record’ low levels, yet a significant number of Australian homeowners remain under pressure.

Estimates based on Roy Morgan’s latest Single Source Survey show that more than one in six mortgage holders (roughly 677,000 people) were either ‘at risk’ or ‘extremely at risk’ of mortgage stress in the three months to May 2021.

According to Roy Morgan ‘at risk’ mortgage holders have home loan repayments which exceed a certain percentage of household income, while mortgage holders are considered ‘extremely at risk’ if even the interest only is over a certain proportion of household income.

While the new research highlights the ongoing pressure felt by many households, the latest mortgage stress figures are actually at one of the lowest points recorded and they’re noticeably lower than during the early period of the COVID-19 pandemic.  

“The latest Roy Morgan data into the Australian housing market shows mortgage stress is near record lows in mid-2021 despite the end of the Federal Government’s $89 billion JobKeeper wage subsidy at the end of March 2021,” said Roy Morgan chief executive, Michele Levine. 

“In the three months to May 2021 there were 677,000 mortgage holders considered ‘At Risk’ (17.3% of mortgage holders) and 440,000 considered ‘Extremely at Risk’ (11.8% of mortgage holders). 

“Both measures of mortgage stress have dropped during the first half of 2021 as strong employment markets and record low interest rates have combined to support the economy despite the end of the elevated Government financial support.”

Will new lockdowns raise stress levels?

What remains to be seen is the impact the present COVID-related lockdowns in New South Wales, Victoria and most recently, South Australia, will have on levels of mortgage stress. 

Currently 13 million people in the three states are in some form of lockdown, with many experiencing reduced working hours or job loss as a result of tightened restrictions. 

According to Levine, over two in three mortgages are dependent on more than one income, which means that any form of reduction can heighten the risk of stress. 

“Many years of research into mortgage stress has shown that the biggest driver of increased mortgage stress is the reduction in income caused by the loss of a job which causes an immediate jump into a ‘risk’ category,” she said. 

However, it’s hoped that economic support from both federal and state governments may, once again, go some way to alleviating mortgage stress.

“The latest outbreaks of COVID-19 in Sydney and Melbourne are causing renewed concern as hundreds of thousands of workers in both cities are forced to stop working as part of the lockdowns across industries such as retail, hospitality, recreation and in Sydney, the construction industry,” said Levine. 

“The good news is that one of the lessons of the pandemic, to provide financial support to those forced into financial distress by lockdowns, has been learnt – with both Federal and State Governments increasing the level of new financial support available in both States in the last week.”

RELATED: Property for sale listings continue to decline, says REA

For more information on the bank and government-based assistance available to Australians affected by the pandemic, check out our mega guide on everything you need to know about Coronavirus and your finances.

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