Mortgage stress levels among Australians have continued to soar amid the global outbreak of COVID-19, with data showing more than 1.4 million Australian households are now in mortgage stress and almost 100,000 could soon default on their loans.
The latest data from Digital Finance Analytics (DFA), based on its rolling household surveys, reveal that to the end of May, the percentage of households in mortgage stress reached 37.5 per cent, which equates to 1.42 million households.
DFA principal Martin North said the study defines mortgage stress in terms of a household’s actual cashflow — incomings and outgoings.
“The mix of households in stress are changing, as a larger number of affluent households are finding their finances are under pressure,” Dr North said.
“Indeed, whilst many battlers are under pressure, they are used to it, but more affluent households are experiencing financial pressures as incomes have dropped.”
Australians seek regional affordability
Real estate agents say COVID-19 has sparked a new wave of enquiries from Australians interested in moving from capital cities to regional areas. He said JobKeeper had not been a full replacement of their usual income.
“They are also exposed to property investments which are not performing, higher vacancy rates and the like; and in some cases, reduced hours too,” he said.
“Typically, it can take two to three years for stressed households to either sell up on their own volition, or get foreclosed, so we expect higher default ahead given unemployment will be under 7 per cent by the end of next year.”
Rental stress is also rising, putting more pressure on investment properties.
“Around 12 per cent of investors are indicating they may consider selling in the next year, and around half have been using Airbnb to let their places, which is now not possible,” Dr North said.
Stress is not limited to the metropolitan capitals.
“The highest proportions are in Tasmania. Households with low incomes and strong rises in prices,” he said.
“And young growing families, including first-time buyers are most exposed.”
Story continues
https://www.abc.net.au/news/2020-06-04/covid-recession-mortgage-stress-default-home-loans-jobkeeper/12318274
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