More than 1.4m mortgage borrowers at risk of repayment stress
If the Reserve Bank raises the cash rate for a 13th time at its meeting on Tuesday, an additional 51,000 borrowers will be forced into mortgage stress, according to analysis by Roy Morgan.
The researcher found the number of Australians already struggling to make home loan repayments has surged by 627,000 over the past year, to an estimated 1.43 million borrowers.
Almost three out of every 10 borrowers are at risk of mortgage stress after the RBA’s rate rising cycle. Peter Rae
This represents 28.8 per cent of all mortgage holders – the highest number in 15 years – and follows the RBA’s dozen rate increases since last May to take the cash rate to 4.1 per cent, its highest level since May 2012.
An additional cash rate rise next month would leave an extra 94,000 home loan borrowers struggling to make repayments, Roy Morgan said.
The warning comes with the market finely balanced on whether another official increase will be announced on Tuesday afternoon.
Stronger retail spending for May, resilient inflation and a slight increase in building approvals could spur a further rise, but the central bank may be concerned about putting too much pressure on over-indebted borrowers and triggering a recession.
Roy Morgan’s assessment of who is “at risk” of mortgage stress is based on borrowers who have to pay between 25 per cent and 45 per cent of their after-tax income on home loan repayments.
Mortgagees considered “extremely at risk” – where borrowers pay more than 45 per cent of more of their income on loan repayments – increased to 922,000, or 19.3 per cent, over the three months to May, well above the long-term average over the past 15 years of 15.9 per cent.
Another two RBA interest rate increases, which would take the cash rate
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