More than a quarter of dual income households will be at risk of mortgage stress if even the lower income earner were to drop out of the workforce, according to research from Roy Morgan.
A total of 67.2 per cent of owner-occupied mortgages were held by households with two incomes, with close to 20 per cent of these classified as ‘at risk’.
Data collected by Roy Morgan showed that 13.1 per cent of mortgages owners were categorised as ‘extremely at risk’, up from just under 12 per cent this time last year. Mortgage stress, which peaked during the financial crisis in 2008, was calculated based on the ability of the borrowers to meet repayment guidelines.
While risk levels for dual-income households were lower than the national average, they were more likely to experience ‘dramatic’ levels of mortgage stress, if one income in the household were suddenly lost due to uncontrollable circumstances.
In addition to this, unemployment remained a high risk factor for determining mortgage stress.
“Analysis has shown that the loss of an income in a two-income household has more impact than a doubling of interest rates,” Roy Morgan industry communications director, Norman Morris, said.
“The biggest impact on mortgage stress is likely to be unemployment or a move to increased levels on unemployment.”
Morris stated that mortgage stress was a common risk leading to debt, leaving Australians concerned about their post-retirement financial prospects.
“With increased mortgage debt comes the increased likelihood that when people retire, they will do so with some debt, which will obviously impact their retirement funding,” he said.
“Mortgage risk is in fact higher already for the over-60s due to lower averages in income.”
With mortgage stress a problem for both dual and single earning households, Morris said that the housing industry would likely experience a new down trend in the amount of owner-occupied mortgages and in house ownership levels.
“While prices continue to outpace growth in household incomes… borrowers are likely to be stretched further in their ability to make loan repayments,” he said.
“Home ownership levels are very likely to decrease further.”
