Aussie households punished by rising mortgages and rents

A new survey from National Australia Bank has underlined the nation’s growing cost-of-living crisis.

The financial hardship survey has found that over 4 in 10 (43%) Australians experienced some form of financial hardship in Q2:

12% of Australians were unable to pay a gas, water or electricity bill in the June 2023 quarter, compared with just 8% during the same period in 2022.

About 11% of households were not able to pay a phone or internet bill, while 9% missed a credit card payment.

However, the proportion of households that missed a mortgage repayment rose by just 1% year-on-year, from 4% to 5%.

The worsening financial situation reflects a number of factors.

First, the roughly one-third of households with a mortgage are obviously being smashed by the RBA’s 4.0% of interest rate hikes, which has lifted variable mortgage repayments by about 50%.

The situation facing this cohort will only worsen if the RBA hikes further.

There are also around 500,000 fixed rate mortgages that will expire over the second half of this year, which will reset these mortgages from rates of around 2% to variable rates approaching 7%:

Second, the roughly one third of renting households are experiencing explosive rental growth, especially across the major capital cities:

Rental inflation will remain turbo-charged given the federal government is running the biggest immigration program in history amid falling housing construction rates:

Finally, overall cost-of-living pressures are impacting all cohorts, driven by the hyperinflation in energy (gas and electricity) prices along east coast Australia.