While the nation awaits the RBA’s decision on interest rates for this month, research has found more than a quarter of the nation’s mortgage holders are already “at risk of mortgage stress”.
According to the data from Roy Morgan, released ahead of Tuesday’s RBA decision, about 1.38 million mortgage holders were now in the “at-risk” category in the three months to April 2023.
The period encompassed two interest rate increases of 0.25 of a percentage point, taking official interest rates to 3.6 per cent in April.
This is the highest number of mortgage holders considered “at risk” since August, 2008, when there were more than 1.4 million in the category.
At 27.8 per cent, the proportion of mortgage holders considered “at-risk” is the highest for more than a decade when 28.3 per cent were in the category in October, 2011.
“The number of Australians at risk of mortgage stress has increased by 529,000 during the past year as the RBA increased interest rates at 11 of its past 12 monthly meetings,” a spokesperson said.
“Official interest rates are now at 3.85 per cent in May 2023, the highest official interest rates since May 2012 more than a decade ago.
“Despite the sharp increase in the level of mortgage stress during the last year it remains below the high reached during the Global Financial Crisis in early 2009 of 35.6 per cent (1.45 million mortgage holders).”
The research found the number of mortgage holders considered “extremely at risk, has now increased to 881,000 (18.5 per cent) in the three months to April, 2023 which is now significantly above the long-term average during the past 15 years of 661,000 (15.9 per cent).
“Official RBA interest rates are now at a decade high of 3.85 per cent and there is a fair chance interest rates increase in June by 0.25 of a percentage point and perhaps in July as well by 0.25 per cent,” a spokesperson said.
“The latest ABS CPI figures for the month of April 2023, released last week, show an annual inflation rate of 6.8 per cent—well above the target range of 2-to-3 per cent over the course of the cycle.
“Roy Morgan has modelled the impact of two potential RBA interest rate increases of 0.25 per cent in June, taking the rate to 4.10 per cent, and July, a 0.25 per cent rise, taking the rate to 4.35 per cent.
“This would lift the number of ‘at risk’ mortgagees to more than 29.2 per cent in June and 30 per cent by July.”
Article source: Queensland Property Investor
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