The mortgage stress level among Australian borrowers has intensified by the end of 2022, with around 1.1 million mortgage holders considered at risk.

According to Roy Morgan’s latest research, 23.9% of mortgage holders were categorised as at risk for mortgage stress over the three months to December 2022.

This was the highest mortgage stress level since May 2013.

It is important to note that the period covers three months of rate increases, which brought the cash rate to its current level at 3.1%.

The level of mortgage stress is now above the long-term average of 22.8%. However, despite the sharp increase, the overall number remains well below the high reached during the Global Financial Crisis in early 2009 of 35.6% or around 1.46 million mortgage holders.

Meanwhile, the share of borrowers considered “extremely at risk” rose to 15% to around 666,000. This is in line with the long-term average of 15.9% over the last 15 years.

Roy Morgan CEO Michele Levine said if the Reserve Bank of Australia (RBA) moves the cash rate up over the next two months to 3.6%, mortgage stress levels are likely to continue increasing.

“If the RBA does raise interest rates again in the next two months by a total of 50bps, mortgage stress is set to increase to over 1.2 million mortgage holders considered at risk by March 2023 – 26.3% of all mortgage holders,” she said.

However, Ms Levine said it is crucial to consider household income and employment when forecasting mortgage stress levels.

Employment estimates show a near-record 13.6 million employed Australians in December 2022, up by over 650,000 since February 2020 when there were 12.9 million employed pre-pandemic.

“The latest figures on mortgage stress show that as long as employment levels remain strong the number of mortgage holders considered at risk will not increase to anywhere near the levels experienced during the GFC in 2007-08-09,” Ms Levine said.


Photo by Andrea Piacquadio from Pexels.