‘Barely afloat’: 40% of Aussie mortgage-holders in distress

Patrick Buncsi

6 September 2024

An estimated 1.4 million Australian households – more than 40% of home loan holders – are in mortgage distress, new figures from consumer finance comparison service Finder reveal.

The monthly survey, conducted by Finder since 2019, recorded the highest level of mortgage stress since its inception.

Around 13% of households also reported missing one or more mortgage repayments over the past six months.

Overleveraging remains an ongoing challenge for many households. The average owner-occupier loan, as of August 2024, sits at $634,479, up 1.3% on the previous month.

Over the past year, the average mortgage has risen by 9.3%, according to Australian Bureau of Statistics (ABS) figures.

With the cash rate sitting at a 12-year-high, unmoved since November 2023 despite concerns over a flatlining economy, Australians are likely spending a disproportionate amount of their income servicing their home loans, Finder notes.

ANZ CoreLogic data shows that Australian householders must, on average, spend upwards of 46% of their income on servicing a new mortgage, up from 40% the previous year. In Australia’s most expensive city, Sydney, more than 58% of household income is required to service a mortgage.

Householders are typically advised to spend no more than one-third of their income on their mortgage.

Australians’ savings buffers have also steadily eroded over the last decade, further challenging mortgage-bearing households. The ABS’s release this week of National Accounts data shows a steady decline in the household savings ratio, down at 0.6% – a 12-fold decline since June 2022.

“Millions of mortgage holders have managed rate hikes so far, but now they’re facing severe financial strain as their savings and emergency funds dry up,” said Finder’s Richard Whitten.

He added: “Housing is increasingly becoming a major source of stress for Australians, with many struggling to keep afloat.”