Mortgage Stress Hits Hard: Could you be the 1 in 5?

Couple looking over paperwork

Credit – Tina Mitchell

Mortgage Stress Hits Hard: Could you be the 1 in 5?

1 in 5 Australians are currently suffering from mortgage stress – could this be you? More and more Australians are getting sucked into the cycle of paying off loans that are just not manageable with their level of income. Being the major cause of the GFC; mortgage stress is where 30% or more of your income is being put towards your home loan each year, causing stress at home and making ends meet.

“According to an industry study, Australians are on average forking out 31.7 per cent of their median weekly family income on mortgage repayments.” – news.com.au

Could you be part of this staggering figure? According to REIA Adelaide Bank Housing Affordability Report, the proportion of income to loan repayments has increased by 1.4%, meaning affordability is on a downward slope. With new loans increasing in size, housing affordability has not been trending in the right direction since the latter half of 2015.

In recent Roy Morgan research, financial risk was at the forefront of everyone’s minds. Mortgage stress is emphasised as retirement readiness declines from difficulty with putting savings away. In 2000, close to 72% of people owned their home outright or were paying it off; now this figure has dwindled to around 65%. Although, the amount of people who are still paying their home loan has in fact remained very similar. These results indicate that with the same amount of people paying off their home, mortgage stress appears to be a driving factor in people not being able to own their home outright whilst balancing other financial commitments. Could the great Aussie dream of owning your own home be just a fantasy?

Despite the recent headlines regarding the softening of consumer confidence, the RBA may not be looking to cut rates again, further alleviating any potential increase in mortgage costs. On a more positive note, mortgage stress should not continue to increase as the RBA meeting on September 6th should see rates stay as they are, creating an atmosphere of stability. Although, strain could be put on the banks and home owners from a debt perspective if economic conditions begin to worsen.

If you feel like your mortgage has taken a hold on you; refinancing your home loan could allow you to consolidate your debt. Consolidating allows you to package debts into one repayment with the low interest rate of a home loan.

Speak to a refinance specialist about your situation today.

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