According to Roy Morgan’s January mortgage stress survey, 31.0% of owner-occupied households with mortgages are “stressed”, the highest level since October 2008, when the official cash rate (OCR) was 2.9% higher at 7.25%.
The figure for January set a new record high total for the number ‘At Risk’ of mortgage stress, surpassing the previous record highs of more than 1.56 million in August and September 2023.
Because of the larger size of the Australian mortgage market today, the proportion of ‘At Risk’ mortgage holders (31.0%) is significantly lower than the record high recorded during the Global Financial Crisis in 2008.
In mid-2008, 35.6% of mortgage holders were experiencing mortgage stress, a record high.
Since May 2022, when the RBA began its interest rate hiking cycle, the number of Australians ‘At Risk’ of mortgage stress has climbed by 802,000. Official interest rates are at 4.35%, the highest since December 2011, more than a decade ago.
This has nearly doubled the amount of interest charged, as well as lifted scheduled mortgage repayments by around one-third:
The number of mortgage holders considered ‘Extremely At Risk’ has also reached 994,000 (19.8% of mortgage holders), much higher than the long-term average of 14.3% over the last ten years, according to Roy Morgan.
It is worth pointing out that Roy Morgan uses a conservative forecasting model that assumes all other factors remain the same.
Given that Australia’s unemployment rate is certain to rise significantly this year, this means that mortgage stress should continue to increase even if the RBA keeps the official cash rate on hold.
Relief won’t arrive until the RBA begins its next rate-easing cycle, most likely later this year.
