More homeowners were “at risk” of mortgage stress over the three months to January than at any time in Australia’s recorded history, new research shows.

The Roy Morgan data indicated 1,609,000 mortgage holders were at risk of mortgage stress over the three month period, which followed an interest-rate increase on Melbourne Cup Day.

The figure for January represented a new record high total for mortgage holders considered at risk of mortgage stress.

It beat the previous record highs of about 1.56 million mortgage holders in August and September 2023.

The figure was also nearly double the number of Australians at risk of mortgage stress before the Reserve Bank began a cycle of interest rate hikes in May 2022.

Mortgage holders are considered at risk if their mortgage repayments are greater than a certain percentage of household income – depending on income and spending.

Official interest rates are now at 4.35 per cent, the highest since December 2011.

The share of Aussie homeowners at risk of mortgage stress was 31 per cent, which was lower than levels seen during the financial crisis in 2008 and 2009, when the world economy was shrinking.

The proportion of mortgage holders at risk of mortgage stress was lower in the January period, despite more property owners being at risk, due to the larger size of the Australian mortgage market today compared to during the GFC.

The record high of 35.6 per cent of mortgage holders in mortgage stress was reached in mid-2008.

Another 0.25 per cent increase to the cash rate in March, if announced, would put another 16,000 mortgage holders at risk of mortgage stress, Roy Morgan modelling showed.

Roy Morgan CEO Veronica Levine said rising mortgage stress levels were not being driven up solely by interest rate increases.

“The variable that has the largest impact on whether a borrower falls into the ‘At Risk’ category is related to household income – which is directly related to employment,” she said.

“However, rising interest rates since May 2022 have caused a large increase in the number of mortgage holders ‘At Risk’. If there is a reacceleration in inflation over the months ahead, that results in further interest rate increases in 2024, levels of mortgage stress are set to increase further to new record highs.”

Roy Morgan noted that unemployment is “the key factor which has the largest impact on income and mortgage stress”.

The group’s unemployment estimates for January showed almost one-in-five Australian workers were either unemployed or underemployed – representing about 19.3 per cent of the workforce.

Sourced from realestate.com