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Roy Morgan research shows mortgage stress will exceed GFC levels if the RBA raises rates again tomorrow.
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Rate rise ‘will push at risk mortgage-holders to record high’
01 May 2023
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9 minute read
Mortgage stress has risen to the highest level in 15 years with more than one-quarter of debtors “at risk” according to the latest Roy Morgan research, and the number will hit a record level if the RBA lifts interest rates tomorrow.
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The Roy Morgan survey estimated 1.35 million mortgage holders were on the brink – 27.1 per cent – a figure just shy of the 1.37 million at risk during the global financial crisis in September 2008.
The result comes on the eve of the next RBA decision about interest rates and shows the cumulative impact of 10 consecutive increases since May last year, with only one rise (by 0.25 points in March) during the survey period of Q1 2023.
Roy Morgan said the number “at risk of mortgage stress” had increased by 590,000 over the last year as official interest rates rose from 0.1 per cent to the highest level since June 2012, 3.6 per cent.
Roy Morgan CEO Michele Levine said an RBA decision to lift rates tomorrow would push a further 171,000 into mortgage stress.
“The latest figures show rising interest rates are causing a large increase in the number of mortgage holders considered ‘at risk’ and further increases will spike these numbers even further,” she said.
“If the RBA does raise interest rates again … Roy Morgan forecasts that mortgage stress is set to increase to over 1.5 million mortgage holders (30.5 per cent) considered ‘at risk’ by May 2023 – this would be a record high number.
“Of more concern is the rise in mortgage holders considered ‘extremely at risk' now estimated at 835,000 (17.3 per cent) in March 2023 – the highest for over a decade."
Roy Morgan said if the RBA went further and raised interest rates by 0.25 points in June to 4.1 per cent, there would be 1,557,000 mortgage holders at risk by June 2023 – an increase of 205,000.
Roy Morgan interviews an average of more than 2,700 people over each quarter for its survey. Mortgage holders are considered at risk if their mortgage repayments are greater than a certain percentage of household income, depending on income and spending. Extremely at risk means the proportion of household income is exceeded even if mortgage repayments are interest only.
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