This article is from the Australian Property Journal archive
EVEN with the RBA rata pause, mortgage stress continued to rise to a record high of 1.63 million February.
According to the latest research from Roy Morgan, 1,629,00 mortgage holders or 31.4% were considered at risk of mortgage stress in the three months to February.
This represents an increase of 20,000 or 0.4% on the previous record high in January, despite interest rates remaining at 4.35%.
However, because there was a larger number of Australians with a mortgage during the Global Financial Crisis, the current level is still below that high.
Since the RBA’s cycle of interest rate hikes began in May 2022, the number of those at risk of mortgage stress has increased by 822,000, with the bank pausing rises in their first meeting of 2024.
With the number of mortgage holders now considered “extremely at risk” now at 987,000 or 19.7% of mortgage holders. This is significantly higher than the decade average of 14.3%.
According to Roy Morgan modelling, the impact of another RBA interest rate of 0.25% in May 2024 would result in an increase to 1.64 million or 31.6% of mortgage holders.
“This would represent a new record high number of mortgage holders considered ‘At Risk’ for mortgage stress,” said Michele Levine, CEO at Roy Morgan.
“The latest figures for February show that when considering the data on mortgage stress, it is always important to appreciate interest rates are only one of the variables that determines whether a mortgage holder is considered ‘At Risk’ of mortgage stress.
The current figure will remain unchanged in March and April with no interest rate increases to occur in either month.
“The extended pause in official interest rate increases for four months from July – October 2023 reduced the pressure on mortgage holders and allowed growth in several areas of the economy to ‘catch up’ and reduce mortgage stress from the mid-year highs above 1.56 million,” added Levine.
“However, the interest rate increase in November has added renewed pressure on mortgage holders.”
