Borrowers at risk of mortgage stress inch lower

The latest research released by Roy Morgan has found that there are now 1,659,000 mortgage holders at risk of mortgage stress in the three months to August 2024.

This figure represents 29.5 per cent of mortgage holders in the country and has shown a drop of 0.3 per cent on the July figures following the introduction of stage 3 tax cuts, which increased household income for many borrowers.

Since the Reserve Bank of Australia (RBA) began increasing interest rates over two years ago, there are now 852,000 more mortgage holders at risk of mortgage stress.

Meanwhile, the number of mortgage holders considered “extremely at risk” now numbers 1,013,000, or 18.6 per cent, still sitting significantly above the long-term average over the last decade of 14.5 per cent.

Roy Morgan CEO Michele Levine said: “Although the Reserve Bank is meeting this week, the crucial next monthly inflation figures are due out next week for August.

“These figures, and the subsequent inflation figures due to be released in the final week of October, will have a large influence on future movements in interest rates.

“However, 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 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 over the last year.”

This comes as recent findings from the Mortgage & Finance Association of Australia (MFAA) found a shift in borrower concerns in regard to home loan repayments, with cost of living presenting as a growing financial stress factor.

According to the MFAA, over a quarter of borrowers identified cost of living as a leading cause of financial strain.

MFAA CEO Anja Pannek said: “While the cost of a mortgage is still the leading cause of financial stress, as Australians become accustomed to rates at the levels they are today, it is non-negotiable expenses such as childcare and energy bills where families are feeling the pressure.”

[RELATED: Brokers report shift in repayment concerns as cost of living bites]

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.