Stage 3 tax cuts driving lowered mortgage stress levels

Research released by Roy Morgan has found that there are now 1,604,000 mortgage holders “at risk” of mortgage stress in the three months to July 2024.

This figure represents around 29.8 per cent of mortgage holders in Australia and has shown a decline of 0.5 per cent on June following the introduction of the stage 3 tax cuts that increased household income for many mortgage holders.

According to Roy Morgan, this level of mortgage holders at risk of stress is set to continue to decline over the next few months; however, this will not occur should the Reserve Bank of Australia (RBA) decide to increase interest rates in its next meeting.

As such, Roy Morgan has modelled the impact of a potential rate increase in September to 4.6 per cent; however, this is still forecast to fall 4,000 from its current level even if the RBA decides to increase the official cash rate.

Despite this, with the latest Monthly CPI indicator for July released by the Australian Bureau of Statistics (ABS) showing a fall in monthly inflation to 3.5 per cent (from 3.8 per cent), the RBA is expected to hold the official cash rate at 4.35 per cent at its September meeting.

As of July 2024, there were 797,000 more at risk mortgage holders since interest rates began climbing in May 2022.

Furthermore, the number of mortgage holders considered “extremely at risk” is now numbered at 982,000, or 18.9 per cent of mortgage holders, still sitting significantly above the long-term decade average of 14.5 per cent.

Roy Morgan CEO Michele Levine said: “The latest figures show that when considering mortgage stress, it is important to appreciate that interest rates are only one of the variables that determines whether a mortgage holder is considered ‘At Risk’.

“The Stage 3 income tax cuts are delivering significant financial relief, and a boost to take home pay, for millions of Australian taxpayers – including many mortgage holders.

“As these figures show, the variable with the largest impact on whether a borrower falls into the ‘At Risk’ category is related to household income – which is directly related to employment.

“The employment market has been strong over the last year (the latest Roy Morgan estimates show 375,000 new jobs created compared to a year ago) and this has provided support to household incomes which have helped to moderate levels of mortgage stress since the highs of early 2024.”

[RELATED: Rate hike would ‘offset the benefit’ of tax cuts]

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.