Sydney and Melbourne lead the nation in mortgage stress: RBA
Nearly one in five borrowers are shelling out more than 30 per cent of their income on mortgage repayments, according to internal Reserve Bank research. The Australian National University associate professor Ben Phillips said mortgage stress was probably as high as had ever been, if defined as spending more than 30 per cent of household income on a home loan. Unemployment nationally was 3.7 per cent in August, and unemployment among homeowners was likely “almost non existent” with between 1 per cent and 3 per cent. The Australian Financial Review’s quarterly survey of 42 economists shows 50 per cent expect one final rate increase to 4.35 per cent this year, while the first rate cut was pushed back to August 2024 from May 2024 due to the strong jobs market and persistent inflationary pressures. Mr Phillips said analysing the effect of interest rate changes on household balance sheets was complicated by the fact Australia does not have meaningful or regularly updated measures of financial stress.
Pubblicato : 2 anni fa di Michael Read in Finance
The situation was worse among the poorest quartile of borrowers, about 45 per cent of whom had high repayment burdens, up from 25 per cent before the first cash rate increase in May 2022.
Sydney and Melbourne, as well as rural areas in Western Australia and the Northern Territory, recorded the highest proportion of households in mortgage stress.
Australian National University associate professor Ben Phillips said mortgage stress was probably as high as had ever been, if defined as spending more than 30 per cent of household income on a home loan.
“But most households, because employment is so strong and unemployment is so low, they seem to be coping,” Mr Phillips told The Australian Financial Review.
While unemployment nationally was 3.7 per cent in August, unemployment among homeowners was likely “almost non existent”, Mr Phillips said, putting it somewhere between 1 per cent and 3 per cent.
“Things that really matter, like arrears and defaults still seem to be very low, so [mortgage stress] doesn’t seem to be having any sort of major macro implications for the economy at this point, apart from the fact that people are probably adjusting their spending elsewhere,” he said.
“If interest rates stay high or go higher, then that will be a problem for some. But I think the state of the economy and unemployment in particular is probably the key for trouble with the mortgage market.”
The Australian Financial Review’s quarterly survey of 42 economists shows 50 per cent expect one final rate increase to 4.35 per cent this year, while the first rate cut was pushed back to August 2024 from May 2024 given the stubbornly strong jobs market and persistent inflationary pressures.
ANZ senior economist Adelaide Timbrell said she expects a “hawkish pause” at Tuesday’s RBA meeting, pointing to data released last week showing inflation accelerated to 5.2 per cent in August due to a jump in petrol prices.
“While much of the lift in inflation reflects volatile items, such as petrol prices, which we think the RBA can look through, there was also a little more inflation in other parts of the basket versus our expectations,” she said.
“For now, we still see the RBA on an extended pause, but signs inflation might be running a little higher than expected are consistent with the risk we have been highlighting, namely if the RBA moves this year or early next, rate rises are more likely than cuts.”
Mr Phillips said analysing the effect of interest rate changes on household balance sheets was complicated by the fact Australia does not have meaningful or regularly updated measures of financial stress.
“Various measures such as arrears, insolvency, savings and so on are partial measures or measures that are perhaps too late in the game,” he said.
Temi: Economy, Australia