A new study has found that over 300,000 mortgage holders around the country have no real equity in their homes, identifying a problem area for our debt-obsessed nation.
Released by Roy Morgan Research, the findings show the risky nature of some loans that are equal to or higher than the value of the property they are secured against.
Western Australian’s are most at risk of falling in to this category with 9.2 per cent of mortgage customers having home values less than or equal to the amount owed. This is an increase from the 2012 figure of 8.1 per cent.
New South Wales, with its ever increasing property prices, had the least amount of customers in this category at only 5.1 per cent. This shows an improvement on the 2012 figure of 7.6 per cent and is a sign of the state’s strong property market.
In every state, these high risk borrowers were more likely to have a home valued well under the overall median property price and to be on a lower income.
“With over 300,000 home borrowers having no real equity in their homes, this represents a considerable risk, particularly if home values fall or households are hit by unemployment,” said Norman Morris, Industry Communications Director, Roy Morgan Research.
“In addition if home-loan rates rise, the problem would be likely to worsen as repayments would increase and home prices decline, with the potential to lower equity even further.”
Source: Graphs and research by Roy Morgan Research
