Mortgage stress near record lows?

According to Roy Morgan Research, Australia’s mortgage stress is running near record lows due to around 400,000 mortgage holders on repayment holidays:

New research from Roy Morgan shows an estimated 751,000 mortgage holders (20.2%) were at risk of ‘mortgage stress’ in the three months to August 2020 as Australia navigated its way through the COVID – 19 pandemic. was living in a ‘COVID-normal’ situation although Victoria entered a Stage 4 lockdown.

This is near the record lows of a year ago when only 723,000 mortgage holders were considered ‘At Risk’ in the three months to October 2019. However, the significant support provided to the economy by the Federal Government as well as measures taken by banks and financial institutions to support borrowers over the last six months is not going to last forever.

Importantly, Roy Morgan has tracked the impact of COVID-19 on the employment situations of Australians. In May 2020, 11.2 million working Australians (72%) reported a change to their employment circumstances because of COVID-19, and in July 2020 there were still 10.4 million reporting their employment situation had changed – see more detail here.

Many of these employment changes are negative and include having ‘work hours reduced’, ‘not having any work offered’, ‘have been stood down for a period of time’, ‘business has slowed or stopped completely’, ‘had pay reduced for the same number of work hours’ or being ‘made redundant’.

For Australians with negative employment changes due to COVID-19 mortgage stress is significantly higher with over a quarter, 26.7%, now in ‘mortgage stress’ – over 6% points higher than for all mortgage holders. In addition, over one-in-six, 16.8%, are ‘extremely at risk’.

How are mortgage holders considered ‘At Risk’ or ‘Extremely At Risk’ determined?

Roy Morgan considers the risk of ‘mortgage stress’ among Mortgage holders in two ways:

Mortgage holders are considered ‘At Risk’1 if their mortgage repayments are greater than a certain percentage of household income – depending on income and spending.

Mortgage holders are considered ‘Extremely at Risk’2 if even the ‘interest only’ is over a certain proportion of household income.

Over 1-in-5 mortgage holders were ‘At Risk’ in August, near the record lows of late 2019

In the three months to August 2020, 20.2% of mortgage holders were ‘At Risk’ (751,000) which is near the record low of 723,000 reported a year ago in the three months to October 2019.

Of those ‘At Risk’ more than half, 433,000 or 12.5% of all mortgage holders, were considered ‘Extremely at Risk’ – also near the record low of 425,000 reported a year ago in the three months to October 2019.

The low level of mortgage holders ‘At Risk’ and ‘Extremely At Risk’ of mortgage stress during this period is due to the substantial support provided to the Australian economy by the Federal Government as well as the significant financial support provided by banks and financial institutions.

These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with 50,000 Australians each year including over 10,000 owner-occupied mortgage-holders.

This data contradicts that of Martin North from Digital Finance Analytics, which reports mortgage stress near record highs:

Overall mortgage stress eased back to below 40% of borrowing households at 39.5%. But it remains very high. This is measured in net cashflow terms…

Across our household segments, young growing families (which include first time buyers) are most exposed, together with households on new estates on the edges of our towns and cities.

Irrespective, mortgage stress will inevitably rise once mortgage repayment holidays affecting around 400,000 borrowers come to an end, alongside the unwinding of emergency income supports:

Around $10 billion per month of emergency income support is scheduled to expire over the next half. Thus, this will drain households of disposable income, increasing stress levels.

Unconventional Economist
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  1. Less Woke More BlokeMEMBER

    No coinkidink Fraudentennis has been slavering in his desire to open Vic now. They don’t want to be on the Captain Cook any more JK than needed.

    The timing is very neat. Gonna be interesting to see how many businesses actually Gloria G-ynor now. Imagine if the carnage isn’t as bad as people John Lennon. It’s going to be a case of Baha Men if it’s not that bad

    • coinkidink Fraudentennis
      Gloria G-ynor
      Imagine if the carnage isn’t as bad as people John Lennon
      case of Baha Men if it’s not that bad

      Any chance of a translation, or meaning for these expressions?

      • Gloria Gaynor is obviously survive, John Lennon is obviously imagine. Assume coinkidink is coincidence. Baha men would be a guess from me. Not familiar.

      • Less Woke More BlokeMEMBER

        It’s like talking to my father in law

        That’s just one of joshie’s various names A fraudencoal, frydencoal, unstimulus Josh, etc etc

        John Lennon – imagine
        Baha Men – who let the dogs out

        Gloria g-ynor – I will survive – survive

        (It’s literally ridiculous I can’t write Gloria’s last name without triggering MBs pearl clutching spam bot)

  2. TailorTrashMEMBER

    “According to Roy Morgan Research, Australia’s mortgage stress is running near record lows due to around 400,000 mortgage holders on repayment holidays”

    That’s an intresting statement ….guess they define stress as not being able to pay ….so no payment demand no
    stress .

    Just shows the ignorance of the average punter
    …probably no understanding that the mortgage holiday
    is costing them bigly ….and bringing the day of reckoning nearer ….

    One might think that those that understand are bigly stressed

    • Jumping jack flash

      The amount of politicking these days is astounding.

      It is far more politicky than back in the late 90’s during the time of Howard’s Economic Miracle where he pushed all the unemployed people (probably due to the recession we had to have) over to the pension and then threw a ton of money at them so they wouldn’t complain.

      They’ve redoubled on that glorious maneuver for today’s emergency.
      Give the struggling mortgage slaves repayment holidays so there’s no longer any mortgage stress. Pure genius!

    • They are not stressed because they have now accumulated 6 months worth of payments, this buffer will keep the foreclosure genie sitting pretty in the bottle for the next 6 months and we all know once Victoria opens up again the economy will sky rocket and we will all get out jobs back… So overall why would you be stressed…. deluded maybe, but not stressed..

  3. Firstly, these are owner occupier mortgages only, not investors which is worse. Secondly they dont count the 9.6% of mortgages on relief assistance. Add that and you get 29.8% in stress which is near record highs and around the slump in 2011