Lower interest rates ease mortgage stress
Lower interest rates helped to reduce mortgage stress, with 16.8 per cent or 660,000 mortgage holders being considered as ‘at risk’ in the three months to April which compared favourably with 18.4 per cent or 744,000 of ‘at risk’ mortgage holders a year ago, according to Roy Morgan.
The firm’s Single Source survey of 50,000+ people per annum, which included more than 10,000 owner occupied mortgage holders, also found that although the problem of mortgage stress saw an improving trend, people with lower incomes were still at highest mortgage risk.
While households with incomes of over $100,000 per annum were coping well with their mortgage repayments and only one per cent were considered to be “at risk” and less than one per cent to be “extremely at risk”, mortgage stress was still much higher among the lower income groups, under $60,000 per annum, where 85.3 per cent of mortgage holders were considered “at risk” and 65 per cent were considered to be “extremely at risk”.
According to the company, the level of mortgage holders being currently considered ‘at risk’ was based on their ability to meet repayments on the original amount borrowed while mortgage stress was based on the ability of home borrowers to meet the repayments guidelines currently provided by the major banks.
Roy Morgan Research’s industry communications director, Norman Morris, said: “Although mortgage stress levels are trending down over the last year, they remain very sensitive to interest rates and household income levels.
“With the stress levels being much lower in the higher income groups it appears that the decline in overall mortgage risk since the December quarter has been partly as a result of the increased proportion of borrowers in households with incomes over $100,000 pa [per annum].
“The stress levels used in the analysis cover all existing borrowers, which include many who have had a loan for some time and as a result are likely to owe much less than new borrowers, and so face reduced stress compared to new borrowers,” he said.
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