Ordinary workers ‘can’t keep up’ with mortgages, rent and bills – even with multiple jobs

Australia’s “working poor”, including people holding down two or three jobs, are inundating financial counselling services as a combination of high mortgage interest rates and inflation leave them struggling to make ends meet.

A phone hook-up last week of counsellors from across the country heard harrowing stories as those with mortgages and people trying to keep a toehold in the rental market seek help to cover their repayments or find a way out of economic distress.

Calls to financial counsellors are soaring as housing costs - mortgage repayments and rents - hit working Australians.Credit: Marija Ercegovac

Up to 500 people a day are using these services, many for the first time, with the number contacting the National Debt Helpline up by more than 40 per cent since the Reserve Bank started lifting official interest rates in May 2022.

Financial market analysts believe there’s a one-in-three chance the Reserve Bank will use its August 5-6 meeting to lift the official cash rate to a 13-year high of 4.6 per cent. On a $600,000 mortgage, another quarter percentage point increase would lift monthly repayments by $100, taking the cumulative increases since early 2022 to more than $1700.

As repayments have climbed, so have rents risen by about 15 per cent nationally over the past two years.

Growing mortgage repayments and rents, on top of broad inflation, are forcing hundreds of thousands of Australians to seek financial help.

Through the first six months of the year, the National Debt Helpline received more than 78,630 calls – the highest since 2020 when the pandemic forced the closure of many businesses. Calls have climbed by 41.3 per cent since the same period in 2022 when mortgage rates were around 2.5 per cent and rental inflation was flat.

In May alone, calls were up 51 per cent on their 2022 level with more than 500 a day being taken by counsellors.

Online chats, favoured by younger people, have hit record levels, climbing 40 per cent over the past year.

Tania Clarke, the Consumer Action Law Centre’s director of policy and campaigns, said housing costs were the single largest issue.

She said people were struggling to pay their mortgage or rent, forcing many to seek help for the first time.

“A couple of years ago, the people we were hearing from had something go wrong, like they’d lost their job and there had been a death or something like that,” she said.

“Interest rates and the cost of living have just caught more and more people, and their incomes have just not kept up. More and more people are working two jobs, they’re cutting spending but can’t keep up.

“We’re now seeing low- and middle-income people, they’ve reached the end of the road and they need help.”

Previously, a person unable to pay their mortgage would sell their home and return to the rental market. But counsellors are finding the surge in rents has closed off this option.

Apart from housing costs, callers to the debt helpline report a growing number of problems paying council rates, utility bills and credit card or buy now, pay later debts. There has also been a lift in people, usually small business operators, struggling to pay tax office debts.

Over the past year, the number of people holding down more than one job has climbed by 30,000 to a record 974,000.

The biggest increases in average mortgages over the past year have been in Queensland, up by 12 per cent or $63,300, and Western Australia (up 15 per cent or $68,000). Calls to the debt helpline are growing fastest in these states.

Australians are cutting their discretionary spending and focusing only on essentials as cost of living bites.Credit: Trevor Collens

Australian Bureau of Statistics data shows households slashing expenditure, often on necessities, to deal with the cost pressures.

Spending by NSW households fell by 0.6 per cent in the year to the end of May, in Victoria and Western Australia it dropped by 0.3 per cent and in the ACT it slumped by 3 per cent.

NSW households have slashed their spending on discretionary goods and services by 3 per cent while Victorian households have cut it by 2.1 per cent.

A spokesperson for Treasurer Jim Chalmers said the stage 3 tax cuts, its $300 energy relief payment, reduced medicine prices and paid parental leave were aimed at easing stress on households.

“We know people are doing it tough and being hammered by cost of living pressures, which is why we’re rolling out cost of living help from this month,” they told this masthead.

But shadow treasurer Angus Taylor said Australians were hurting because of the government’s economic failures.

“Families are in recession, we’re seeing record business insolvencies and a record number of people working multiple jobs to make ends meet,” he said.

The National Debt Helpline can be contacted on 1800 007007.

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.