Home loan rates down, mortgage stress up

There is increasing mortgage stress for home owners considered to be ‘at risk’ which is based on the amount borrowed, and those ‘extremely at risk’ based on the amount outstanding for the 12 months to July 2017, according to research house Roy Morgan.

In a study on mortgage stress and its financial factors, Roy Morgan found mortgage stress increased to 17.3 per cent of borrowers in July, an increase of 0.3 percentage points over the past 12 months.

These figures are despite a decline in home loan rates.

Commenting on the research, Roy Morgan industry communications director, Norman Morris said borrowing had increased and household income was not always in line with repayment expectations.

“With median household incomes among borrowers showing low growth over the last year, they are not paying off their loans as quickly and as a result outstandings are growing faster than household incomes,” he said.

“The result has been an increase in mortgage stress to the point where nearly one in six borrowers face a potential problem.

“When rates eventually rise, this is likely lead to an even lower number of borrowers but existing mortgage holders who have borrowed in a low interest rate environment are likely to face increased levels of mortgage stress.”

The proportion of borrowers considered ‘extremely at risk’ also increased from 12.4 per cent to 12.8 per cent in the 12 months to July 2017.


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