Thousands of Australians at risk of defaulting on their mortgage

Soaring mortgage costs have pushed thousands of South Australians to the brink of defaulting on their loans. See who is the hardest hit.

Exclusive: Thousands of Australians are at risk of losing their home as the rate of people severely behind on their mortgage rose by up to 75 per cent in the last two years, while one in ten households are in financial stress from “high” repayments.

Currently 0.47 per cent of South Australian home loans – or about 1,157 households based on census data – are at risk of defaulting having fallen at least 90 days behind on their mortgage, according to new data from the Reserve Bank of Australia.

Thousands of Australians are at risk of defaulting on their mortgage. Picture: Brenton Edwards

In 2023 about 0.31 per cent of mortgage holders in South Australia – or about 812 people – were similarly behind, as the Coalition warns it will take more than one rate cut to save struggling households.

Just under one in 10 South Australian borrowers are also in mortgage stress, meaning they are forking out more than a third of their income to pay their home loan.

The north and east outback regions of SA were in the top 10 worst regions nationally for households behind on their mortgage, with about 1.4 per cent at least 90 days in arrears.

Once a mortgage holder fails to make payments for 90 days lenders will send a default notice giving them 30 days to catch up and cover any late fees.

If the borrower still does not pay up, the lender can start legal proceedings to take possession of their home.

Senator Dean Smith says one rate cut will not ease the pain for most mortgage holders. Picture: NewsWire/Martin Ollman

Coalition Senator Dean Smith said as RBA data confirmed the “widespread, growing scale of mortgage stress under Labor”.

“The recent interest rate cut by the RBA was welcome, but it will take many more before

mortgage holders pushed to the edge by Labor’s dozen rate rises experience any meaningful relief,” he said.

“More and more borrowers … are falling behind on their mortgage repayments and it’s a direct consequence of the Albanese Government’s cost of living crisis and cumulative interest rate rises.”

Treasurer Jim Chalmers says there will be more cost of living relief in the budget. Picture: NewsWire/Tertius Pickard

Treasurer Jim Chalmers has flagged more cost of living relief in next week’s federal budget, insisting Labor has been “careful” to ensure any supports do not fuel inflation and jeopardise potential future rate cuts.

“People are still doing it tough and that’s why there’ll be cost-of-living relief in our fourth budget, just like there was in our first three but it will be really responsible once again,” he said.

The jump in people severely in arrears occurred as more than half of mortgage holders rolled from fixed rate to more expensive variable rate loans in 2024.

Assuming a 25-year loan and interest rate of approximately 6.4 per cent, the Bank estimated the switch to a variable rate loan for these Australians translated to an extra $940 in monthly repayments on a $450,000 loan.

An $800,000 loan would cost an extra $1,740 per month and a $1,000,000 loan an extra

$2,170.