1 in 6 borrowers suffering from mortgage stress

The amount of mortgage stress in Australia is significant but declining, Roy Morgan Research has revealed.

A survey of more than 10,000 owner-occupiers between February and April found that 16.8 per cent were ‘at risk’ or facing some degree of stress over their repayments.

That compared to 18.4 per cent during the same period in 2016. It was also “well below the average over the last decade”, according to Roy Morgan.

The survey also found that 11.5 per cent of respondents were ‘extremely at risk’ – the lowest level in more than a decade.

What is mortgage stress?

“Mortgage stress is based on the ability of home borrowers to meet the repayment guidelines currently provided by the major banks,” Roy Morgan said.

“The level of mortgage holders being currently considered ‘at risk’ is based on their ability to meet repayments on the original amount borrowed.”

Low-income households doing it tough

Households with incomes above $100,000 are highly unlikely to suffer from mortgage stress, the survey found.

However, 85.3 per cent of households with incomes below $60,000 are either at risk or extremely at risk of mortgage stress.

Those households are more than three times as likely to suffer mortgage stress as households that earn between $60,000 and $69,999, and more than four times likely as those that earn between $80,000 and $99,999.

Mortgage stress levels can change fast

Roy Morgan industry communications director Norman Morris said that despite the fall in mortgage stress, it remains very sensitive to interest rates and household income levels.

“With the stress levels being much lower in the higher income groups, it appears that the decline in overall mortgage risk since the December quarter has been partly as a result of the increased proportion of borrowers in households with incomes over $100,000 per annum,” he said.

“The stress levels used in the analysis cover all existing borrowers, which include many who have had a loan for some time, and as a result are likely to owe much less than new borrowers, and so face reduced stress compared to new borrowers.”

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