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More Aussies finish 2017 in mortgage stress

More Aussies finish 2017 in mortgage stress

The number of Australians in mortgage stress was on the rise at the end of 2017, with mortgage holders in New South Wales at the greatest risk, according to new analysis from Digital Finance Analytics (DFA).

The latest mortgage stress and default analysis update from DFA found that the number of Australian households in mortgage stress increased from 913,000 to 921,000 in December 2017, with 24,000 of these households in severe stress.

SegmentsHouseholds in mild stressHouseholds in severe stressTotal households in stressNumber risking 30-day default
Battling urban67,62017067,6901584
Disadvantaged fringe258,566110258,6768100
Exclusive professionals33,14410,97644,1204934
Mature stable families99,9894446104,4356960
Multicultural establishment38,158157639,7342596
Rural family64,60464,6044133
Stressed seniors15,140128416,4241974
Suburban mainstream135,8821756137,63810,365
Wealthy seniors28,2379928,3364259
Young affluent11,374310114,4752886
Young growing families144,758670145,4284254

Source: DFA

NSW households were found to be showing the most significant rise in stress, thanks to a combination of larger mortgages relative to income, plus slow income growth.

StateHouseholds in mild stressHouseholds in severe stressTotal households in stressNumber risking 30-day default


Increasing mortgage stress across the country was attributed to rising living costs, falling incomes, and high underemployment.

DFA principal, Martin North, described the number of households impacted by mortgage stress as “economically significant, especially as household debt continues to climb to new record levels”, adding that growth of mortgage lending at three times the rate of income was “not sustainable”.

“Risks in the system continue to rise, and while recent strengthening of lending standards will help protect new borrowers, there are many households currently holding loans which would not now be approved. This is a significant sleeping problem and the risks in the system are higher than many recognise.”

Looking to the future, additional upward pressure was forecast for mortgage rates in 2018, due to mounting international funding pressures, as well as a potential for local rate rises and margin pressure on the banks.

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