New research from Finder paints a concerning picture for mortgage holders, with record levels of financial distress across the country. In its August 2024 report, Finder’s Consumer Sentiment Tracker revealed the highest levels of mortgage stress since tracking began in 2019.
According to the research, more than 2 in 5 homeowners (42%) reported struggling to pay their home loan in August. This equates to approximately 1.4 million Australians facing mortgage distress, marking a significant rise in financial strain for borrowers across the country.
In addition, 13% of homeowners admitted to having missed one or more mortgage repayments in the past six months, further demonstrating the impact of rising interest rates and escalating property costs.
Richard Whitten, home loans expert at Finder, said that many Australians are now spending an unsustainable portion of their income on their mortgages.
“Millions of mortgage holders have managed rate hikes so far, but now they’re facing severe financial strain as their savings and emergency funds dry up. Housing is increasingly becoming a major source of stress for Australians, with many struggling to keep afloat.”
The data shows that, despite record-high cash rates, owner-occupiers are taking out larger loans than ever before. The average mortgage for owner-occupiers now stands at $634,479, an increase of 1.3% from the previous month and a staggering 9.3% increase from the previous year, according to the Australian Bureau of Statistics (ABS). This growing financial burden is exacerbated by the Reserve Bank of Australia’s cash rate, which sits at its highest level in 12 years.
Mr Whitten highlighted the significance of the 30% threshold in mortgage repayments as an indicator of housing stress. “If your mortgage is more than 30% of your take-home pay, then you’re likely experiencing housing stress,” he said.
“The number of people struggling to make their home loan repayments has reached a disturbing level,” he said and rapidly rising interest rates have put first-time homeowners in a very precarious situation.
