Record high 1.57 million Australians are now at risk of mortgage stress, new research shows

Startling new figures have revealed how many Aussies are now at ‘extreme’ risk of mortgage stress.

Startling new figures reveal how many Australians are at risk of extreme mortgage stress.

New research has revealed a record high number of Australians are “at risk” of mortgage stress, however the “extremely at risk” category appears to be most concerning.

Latest research from Roy Morgan reveals those “extremely at risk” has more than doubled to well over one million mortgage holders since interest rates started to rise last year.

It comes as 1.57 million Australians are now deemed “at risk” of mortgage stress following the past 12 interest rater rises, which equates to 30.2 per cent of mortgage holders across the country.

Roy Morgan deems Australians ‘at risk’ if mortgage repayments are greater than a certain percentage of household income and ‘extremely at risk’ if even the interest only is over a certain proportion of household income.

Roy Morgan (Australia) mortgage stress levels between 2007 and 2023

MORE

Inside the rock star lives of Penrith’s NRL kings

James Packer’s $132m mansion for sale

While the latest data was calculated from June to August, which saw one interest rate rise, it “represents a new record high” for those at risk, according to the report.

“This represents a substantial increase of 759,000 since the Reserve Bank of Australia (RBA) began a record-breaking series of interest rate increases in May 2022,” Roy Morgan chief executive officer Michele Levine said.

“Of even more concern is the rise in mortgage holders considered ‘extremely at risk’, now estimated at 1,066,000 in August 2023 – a new record high. This figure has more than doubled since the RBA began raising interest rates, representing an increase of over 580,000 mortgage holders.

Roy Morgan CEO Michele Levine

“The RBA’s decision to leave interest rates unchanged in recent months comes as inflation has reduced compared to earlier this year and there are increasing indications that higher interest rates are eating into household deposits.”

The report says the mortgage stress figures remained below Australia’s record high – 35.6 per cent – reached during the Global Financial Crisis 15 years ago because of the larger size of the Australian mortgage market.

Ms Levine said while many had suggested the RBA would not raise interest rates any further, the low Australian Dollar and high petrol and energy prices adding to inflation “may force their hand”.

The report revealed 1.57m Australians are at risk of mortgage stress.

MORE

Migration shift needed amid rental crisis, modelling shows

Buyer’s $1.3m plus spend after first look at collapsing dump

“If the RBA does raise interest rates this week by 0.25 per cent, Roy Morgan forecasts mortgage stress is set to increase to over 1.65 million mortgage holders (31.4 per cent) considered ‘at risk’,” she said.

Australia’s CPI rose to 5.2 per cent in August, the first increase in the monthly annual inflation reading since April.

“The monthly increase in inflation is concerning, but also not surprising as energy prices have increased rapidly in recent months. The average retail petrol price has increased by around 40 cents per litre since mid-July and averaged over $2 per litre for seven straight weeks since mid-August,” Ms Levine said.

The Roy Morgan report states that while interest rate figures were important indicators of mortgage stress, unemployment had the biggest impact on income and mortgage stress.

Latest Roy Morgan figures reveal unemployment increasing in August to 11 per cent.

“While all eyes are on interest rates the greatest impact on an individual, or household’s, ability to pay their mortgage is not interest rates, it’s if they lose their job or main source of income,” the report says.

Originally published as Record high 1.57 million Australians are now at risk of mortgage stress, new research shows