If the latest figures from the Digital Finance Analytics are anything to go by, then it would seem that more and more households in Australia are suffering mortgage stress.
According to the research firm, 921,000 households are estimated to be under mortgage stress in December, up from the previous month's 913,000. This equates to 29.7% of households. Looking at the data closely, the number of households in severe stress climbed from 3,000 to 24,000.
Digital Finance Analytics' regional analysis shows that New South Wales had the highest number of households under mortgage stress, climbing from 251,576 in November to 258,572.
A household is considered under mortgage stress when its net income is not able to cover ongoing expenses.
Digital Finance Analytics principal Martin North said the number of households affected is economically significant, given that the household debt continues to rise to new record levels.
"Mortgage lending is still growing at three times income. This is not sustainable," he said, noting that the latest household debt-to-income ratio is now at a record 199.7.
While measures are put into place to strengthen lending standards to protect new borrowers, North said there are now many households currently holding loans which would not be approved. North said this is a significant sleeping problem and such risk in the system is more aggravating than many think.
Meanwhile, households with interest-only and investment loans have seen higher rates compared to those owner occupied borrowers.
"We expect some upward pressure on real mortgage rates in the next year as international funding pressures mount, a potential for local rate rises and margin pressure on the banks," North said.
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