Sad home truths on mortgage stress rates in South Australia
More than half of all South Australian mortgage holders are experiencing repayment stress, with almost 9500 more to face financial hardship if today’s interest rate rise goes ahead.
Property
Don't miss out on the headlines from Property. Followed categories will be added to My News.
More than half of all South Australian mortgage holders are currently experiencing mortgage stress, with forecasting showing almost 9500 more will face financial hardship if an expected interest rate rise on Tuesday goes ahead.
According to Digital Finance Analytics (DFA) data, of the 293,900 South Australian households with a mortgage, 160,283 of them – or 54 per cent – were currently experiencing “mortgage stress” as of the end of October.
This makes SA the second-hardest hit state in the nation, with 57.74 per cent of Tasmanian mortgage holders feeling the pinch.
In contrast, 53.2 per cent of Victorian mortgage holders were struggling, and 49.43 per cent of those in New South Wales were under water.
Exclusive analysis shows an interest rate rise of 0.25 per cent by the Reserve Bank of Australia on Melbourne Cup Day would plunge another 9370 South Australians into mortgage stress, taking that total to 169,653 households, or 57.72 per cent of all mortgage holders.
That number jumps to 11,442 households if the RBA imposes another pre-Christmas blow to budgets at its final meeting of the year on December 5.
This figure has jumped significantly in recent years, with 138,298 recorded as stressed in May 2022.
Since 2001, research firm Digital Finance Analytics (DFA) has been tracking the income and debt from a rolling sample of roughly 52,000 households nationally, and in May 2023, it found mortgage and rental stress has never been higher.
DFA principal Martin North said assessments of mortgage stress were not based on a set percentage of income going to mortgage repayments, rather a look at the total look at total cash flow.
“If a household is paying out more each month including the mortgage repayments, compared with income received, they are in stress,” he said.
“Of course they may have assets like deposits, or put more on credit cards, but generally households under pressure spend less, hunker down, and some, two to three years later end up selling or even defaulting.”
Mr North said mortgage defaults were rising.
“More will follow,” he said.
“The longer interest rates and inflation stay high, the more stressed households will decide to sell, or will drift into default.”
According to the data, of all SA councils, the City of Onkaparinga would experience the greatest rise in mortgage stress numbers in the event of a Tuesday rate rise.
Of the council’s 34,329 mortgage holders, 17,579 are currently under mortgage stress. A rate rise would bring this number to 19,786 – an increase of 2207.
All up, an interest rate rise would trigger mortgage stress rate jumps in 20 SA council areas, with numbers jumping by more than 1000 in three councils – Onkaparinga (2207), Charles Sturt (1548) and Tea Tree Gully (1283).
According to DFA, concerningly, every mortgage holder in four regional councils – Roxby Downs, Lower Eyre Peninsula, Coober Pedy and Wudinna – are currently experiencing mortgage stress.
The Town of Gawler council in Adelaide’s outer north, is the state’s most dire metropolitan council, with 80.97 per cent – or 1583 of its 1955 mortgage holders – currently experiencing mortgage stress.
Closely behind Gawler was Port Adelaide Enfield at 77.83 per cent.
AnglicareSA financial counselling and emergency assistance manager Astra Fleetwood said the number of people seeking financial counselling was the highest she had seen in her 15 years with the organisation.
“We’re constantly at capacity,” she said.
“The earlier they seek support, the better it is.
“Because they are in deep arrears with their mortgage and often they’ve tried to manage it by juggling credit cards and putting all their mortgages on credit cards, it digs them into a deeper hole,
“That in turn affects their mental health, which in turn affects a whole bunch of issues in their life, so by the time they are reaching us there’s a whole range of other issues that compound how they’re feeling.”
Ms Fleetwood said there was not enough state and federal government funding to meet demand for counsellors.
“We would love more funding, but realistically that’s a challenge.”
First homebuyers Charlotte Macherel and Jacob McLean have only known interest rate rises and pauses since they bought their home in January, and said they were being careful with their budget to avoid mortgage stress.
“We still have to keep track of our expenses to make it comfortably through the month,” she said.
Since buying their home, the couple has faced five interest rate hikes, which has pushed up their repayments.
“The savings jar is starting to get a bit dry,” Ms Macherel said.
“Recently, we have had to prioritise our mortgage repayments over other items such as travel for Christmas.”
First look: Tower to replace old Surfers Paradise unit complex
Plans for an ultra-thin tower next to one of Surfers Paradise’s busiest light rail stations has been unveiled. FIND OUT WHERE
Read more
First look: Giant new homeware shopping centre expansion
Plans have been unveiled for a massive expansion of a Gold Coast shopping centre which will feature hundreds of carparks and a giant anchor tenant in its showroom.
Read more