The Daily Telegraph reported on 12 May that the pressure on homeowners has reached new heights, with an exclusive report showing that more than half of borrowers in NSW are currently under mortgage pressure.
Research from Digital Finance Analytics (DFA) shows that 50.74% of borrowers were under mortgage stress at the end of April, up from 45.35% a year ago and 40.79% in 2022 when the RBA raised interest rates for the first time.
The DFA analysed 52,000 households across Australia and looked at the average proportion of income that people spend on paying their mortgage and basic expenses such as food and transport.
Martin North, head of DFA, said the resulting numbers paint a frightening picture.
(Image source: The Telegraph)
"Some people spend half of their income just to maintain their homes," North said. If you are among the lucky 40% or 50% of the family, there are family funds...... You can pass on funds, but if you're not in that range, that's a big problem. ”
The data shows that renters are even worse off, with 80% of renter households enduring rent pressure.
Immigration 'makes things worse'
North said the RBA's rate hikes in recent years have been a factor, but recent strong migration is exacerbating the problem.
"Immigration is putting a lot of pressure on rental costs, which in turn is affecting people who are trying to rent or buy their first home. It's a real mess. We are facing a crisis and, unfortunately, I don't think politicians have reacted appropriately. They should reduce immigration. ”
(Image source: The Telegraph)
Dax De Traubenberg, an Abode Property agent specialising in Caringbah and surrounding urban areas, has noticed a decrease in buyer activity due to interest rate hikes and mortgage pressures.
"This can have a negative impact on the market, where people want to upgrade for lifestyle reasons, but can't because they can't manage a bigger mortgage," he said. ”
"In the past few years, people would come and see the property on a Saturday morning and sell it that afternoon. Now, people are spending more time and making bids on multiple properties. ”
(Image source: The Telegraph)
Homebuyers are desperate for interest rate cuts
He noted that a rate cut would give homebuyers the confidence they need.
In February 2023, Ryan Almond and Courtney Strong purchased a house.
They rented a house in Cronulla for many years and saved up money and later bought a house in Jannali to fit their budget and growing family.
Almond said they have since been hit hard by rate hikes.
"We've experienced at least seven rate hikes and our monthly mortgage has gone from $4,100 to $4,800. Since then, we have had another child, so my partner has not been employed and we only have one income. ”
"This has affected a lot of people, and we have friends who bought a house two years ago and now have to move back home to live with their families."