Another rates wrecking ball arrives with a million Qld households under stress

Interest rates were expected to jump another 0.5 per cent today as a new survey found that almost 1 million Queensland households were already in some form of financial stress from rising mortgage repayments or rents.

Aug 02, 2022, updated Aug 02, 2022
Two more interest rate hikes will create high levels of mortgage stress

Two more interest rate hikes will create high levels of mortgage stress

The survey, by Digital Finance Analytics, found that the Toowoomba postcode 4350 was the hardest hit with the nation’s third highest number of people in mortgage stress (10,040) and the highest number of people in rental stress (13,000).

The greatest pressure was on young, growing families, many of whom were first home buyers. DFA found that 83 per cent of households in that demographic Australia-wide were in mortgage stress and 59 per cent in rental stress.

It was likely to get worse with the Reserve Bank Board expected to announce another 0.5 per cent increase to its benchmark cash rate, which was likely to be passed on by lenders.

DFA’s Martin North said the message from the survey was that mortgage stress was “alive and well and taking no prisoners”.

“A total of 1.7 million households are in mortgage stress (nationally). That’s the highest number I have ever seen,” North said.

“More than half (50.4 per cent) of those in the rental sector are struggling to make their payments and also manage their other expenditure. That is troubling indeed.”

The greatest stress was being felt in southern states and the ACT, but North found that in Queensland 292,945 households were struggling with the mortgage, 495,000 had difficulty meeting rents and 145,000 housing investors were also under stress.

The places with high rental stress in Queensland were Toowoomba, Milbank (around Bundaberg), Benowa (Gold Coast), Labrador (Gold Coast) and Basin Pocket (Ipswich).

Overall, 45 per cent of Australian households were in mortgage stress in July compared with 32.9 per cent in February 2020.

North defines stress as a household with more money going out than coming in.

“It doesn’t mean they are going to fall over tomorrow but they are going to have to cut back on other expenditure,” he said.

“Given what we know now that interest rates are going to rise higher, that real wages are not going to grow for another two to three years and inflation is going higher than the chances are that more households are going to be struggling.”




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