Nearly one million Australians experiencing 'mortgage stress': Roy Morgan

 Nearly one million Australians are suffering from ‘mortgage stress’, according to the results of a new survey.

However, the results of Roy Morgan’s Single Source Survey (Australia) are a slight improvement from 12 months ago.

The survey classified 20.8% (949,000) of mortgage holders as in ‘mortgage stress’, compared to 21.3% (974,000) last year.

The report said these people would be in difficulty if there were an increase in mortgage rates, an increase in costs, or an increase in unemployment.

Roy Morgan’s calculations accounted for household income, costs, and mortgage repayments.

The survey is based on face-to-face personal interviews with more than 50,000 Australians per annum, including over 10,000 owner occupied mortgage holders.

The level of mortgage holders at risk varied across the country, with Sydney and Western Australia the most ‘at risk’ areas at 26.4% and 23.8% respectively.

Click here to enlarge.

Norman Morris, Industry Communications Director, Roy Morgan Research said:

“Our research shows that although fewer people have a home loan compared to 12 months ago, the average balance of their loans hasn’t declined. This indicates that loans aren’t being paid off quickly, potentially as a result of low interest rates and the use of redraw facilities to use funds for other purposes.

“The decline in the level of mortgage stress over the last 12 months is due to a marginal increase in the after tax household income as a result of reduced tax rates and a small reduction in the average standard variable rate from the RBA.

“With the potential for a number of major events to impact mortgage stress levels, such as the Finance Royal Commission, interest rates and declining home prices, the future direction of mortgage stress has considerable uncertainty.

“When rates eventually rise, existing mortgage holders who have borrowed in a low interest rate environment are likely to face increased levels of mortgage stress. The final impact however will also be determined by what happens to household incomes, which are currently showing very modest growth."