21.1% of mortgagors ‘at risk’ of mortgage stress: Roy Morgan

Rising interest rates have resulted in an estimated 948,000 mortgagors being “at risk” of mortgage stress, according to new research.

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Australian research company Roy Morgan has estimated that 21.1 per cent of mortgagors were at risk of mortgage stress in the three months to September 2022 following the Reserve Bank of Australia’s (RBA) three consecutive interest rises of 0.5 per cent.

Roy Morgan classified mortgage holders as “at risk” in two ways: if mortgage repayments are greater than a certain percentage of household income and are considered “extremely at risk” if just the interest only is over a certain portion of household income.

Since the October rate hike of 0.25 per cent, interest rates are now at the highest levels since August 2013, sitting at 2.6 per cent.

Although interest rates have continued to rise, the proportion of mortgage holders considered “at risk” of mortgage stress is still well below the heights reached during the global financial crisis in early 2009 of 35.6 per cent (1,455,000 mortgage holders).


At-risk mortgage holders are also sitting below the long-term average over the last 15 years, with 22.7 per cent or 980,000 mortgage holders falling into the category.

Conversely, the number of mortgage holders considered “extremely at risk” has increased to 14.1 per cent (611,000 mortgage holders) in the three months to September 2022; however, this is still below the long-term 15-year average of 15.7 per cent since October 2007.

Roy Morgan has warned that further interest rate rises would result in the current number of “at-risk” mortgage holders rising to 23.3 per cent. If the RBA increases interest rates by 0.25 per cent for the next two months and the official rate hits 3.1 per cent, these increases would result in 26.2 per cent of mortgage holders being classified “at risk”, according to Roy Morgan.

Chief executive at Roy Morgan, Michele Levine, said mortgage stress continues to rise in Australia despite the level of “at-risk” mortgage holders as of September 2022 being below the long-term average.

“The latest Roy Morgan data into the Australian housing market shows mortgage stress has continued to increase this year, with 948,000 mortgage holders (21.1 per cent) now defined as ‘at risk’ in September 2022, up 272,000 on a year ago, during a period of extensive lockdowns in NSW and Victoria,” Ms Levine stated.

“The figures for September take into account the first five interest rate increases by the RBA from May to September, totalling 2.25 per cent.

“If the most recent interest rate increases in October of +0.25 per cent is considered, the estimated number of mortgage holders considered ‘at risk’ increases by a further 89,000 to 1,037,000 (23.3 per cent) — the highest for over nine years since July 2013.”

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