Increased incomes moderating mortgage stress: Roy Morgan

Research released by Roy Morgan has revealed that there were 1,560,000 mortgage holders (30.8 per cent) at risk of mortgage stress in the three months to April 2024.

This has shown an increase of 0.5 per cent (29,000) from March 2024; however, this has shown continued moderation from the highs of January and February after the November 2023 interest rate hike.

According to Roy Morgan, the lower levels of mortgage stress over March and April are attributable to increasing household incomes, which have mitigated financial pressure on some mortgage holders.

Two years on from the Reserve Bank of Australia’s (RBA) first interest rate hike after historical lows of 0.1 per cent, the number of Australians entering the “at risk” of mortgage stress cohort has risen by 753,000.

The ”extremely at risk” category still remains significantly above the long-term decade average of 14.4 per cent, reaching 994,000 (20.2 per cent of mortgage holders) as of April 2024.

This period contained no monetary policy meeting from the RBA as per its revised schedule that commenced from February.

The latest RBA minutes from the May monetary policy meeting revealed the RBA board deliberated on a potential rate hike during the meeting.

The RBA discussed that a rate hike could have “been appropriate” if it developed the view that the “judgements underpinning the staff forecasts risked being overly optimistic about the forces that would drive down inflation, leaving the balance of risks tilted to the upside”.

Indeed, should there be another rate hike in the upcoming June monetary policy meeting, Roy Morgan has modelled the impact of the potential increase of 0.25 per cent that would result in mortgage stress levels rising by 0.1 percentage points to 30.9 per cent (1,566,000), an increase of 6,000 on April.

Roy Morgan CEO Michele Levine said: “Rising household incomes so far this year have been a significant driver of reducing mortgage stress from the highs above 1.6 million reached earlier in the year.

“The same reduction in mortgage stress was seen after the RBA paused rate increases for four months from July – October 2023.

“The figures for mortgage stress in March and April show that when considering the data on mortgage stress, it is always important to appreciate that interest rates are only one of the variables that determines whether a mortgage holder is considered ‘at risk’ of mortgage stress.”

[RELATED: RBA avoided ‘excessive fine-tuning’ during May decision]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.