Mortgage stress has halved, just 2% behind on repayments: Genworth

Genworth’s Homebuyer Confidence Index has risen 7.3 points in September, largely as a result of low interest rates reducing mortgage stress.

First home buyers that purchased over the past 12 months were significant contributors to the lift in confidence, at a high not reported since September 2012, while mortgage stress in general is significantly lower.

In fact, the index recorded that mortgage stress experienced by home owners has almost halved – falling to 15% in September from 28% in March.

Meanwhile, 2% of home owners were reported as behind their mortgage repayments, compared to the three year average of more than 3%.

Genworth Australia chief commercial officer Bridget Sakr said that they suspect the increase in confidence is a result of 13 months of historically low interest rates, as well as increased certainty around the May federal budget and the health of the economy.

“Almost half of surveyed home owners said they increased their mortgage buffer by making overpayments during the past 12 months,” said Sakr.

“Interest rates have virtually disappeared as a source of mortgage stress with just three per cent of struggling homeowners now citing this as a key factor of mortgage stress compared to 50% in September 2011.”

However, the Index also found a slightly increase in those who did not believe now was the time to buy, mirroring the results found by the Westpac Melbourne Institute Index of Consumer Sentiment.

Sakr said this is potentially a result from an increase in property prices.

“While the Genworth Homebuyer Confidence Index has returned to a positive result overall, dwelling value growth of late and the ongoing challenge of saving a deposit means that many prospective first homebuyers are still finding it difficult to enter the property market,” she said.

The index is a survey of more than 2,000 Australians, which asks about the proportion of monthly income used to service debt, comfort levels around LVRs, repayment over the past 12 months and future 12 month expectations.