Australian Property Owners Feeling The Pinch

Post by Sharat on December 21, 2018 · Under News · Comments Off on Australian Property Owners Feeling The Pinch 

As prices for ordinary items such as a cup of coffee continues to rise and companies say there will be no Christmas bonus despite banks hiking mortgage rates, it is hardly a surprise that Australians are feeling squeezed. The latest research by Gateway Bank suggests that a whopping 56 per cent of Australians are facing mortgage stress and believe their home loan is an anchor around their neck, severely limiting their lifestyles.

Rising cost of living

Paul Thomas the chief executive of Gateway Bank say he thinks that the results reflect the rising cost of living and household debts that many ordinary Australians have to contend with. As people seek to climb the property ladder, some Australians have become over-extended and this has meant the household debt-to-income ratio now stands at a record high of 189 per cent. Mr Thomas adds that when we factor in the steep fall in household savings which currently stands at a paltry 1 per cent, we have a recipe for mortgage stress.

Affecting everyone across the country

The worst city for mortgage stress was Adelaide where 63 per cent of residents consider their home loan to be too much of a burden. Perth is close behind with 62 per cent and Darwin and Brisbane weren’t too far off at 61 per cent. In Sydney and Melbourne which have both experienced property booms the figures were 54 per cent and 58 per cent respectively. Property experts believe that residents of Sydney and Melbourne may be experiencing mortgage stress as a result of recent property price corrections which make it more difficult for borrowers to refinance their homes as home values drop.

Investors not spared

Another interesting discovery from the research was that nearly one in ten people polled said they were renters who also own investment properties that they do not live in. Mr Thomas puts this trend down to the fact that the banks are enforcing stricter lending requirements combined with the fact that individuals are seeking easier ways to establish themselves on the property ladder. However, 65 per cent of people who engage in this type of investment reported feeling under mortgage stress.

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