Mortgage stress rising as consumers cut back, auction results

Millions of Australians paying back home loans are suffering mortgage stress, despite the Reserve Bank of Australia cutting rates since September to a 49-year-low of 3%, a new survey reveals.

The new Datamonitor survey shows that about 1.3 million Australians, or nearly 25% of mortgage holders, are experiencing payment stress while nearly 40% have cut discretionary spending.

The survey, which gathered results from 2300 respondents, also shows that 21% of mortgage borrowers believe it will be “very difficult” to make repayments.

About 39% of borrowers said they have cut back on discretionary spending to make mortgage repayments, while 29% have cut back on household spending. About 29% of all consumers said they will have difficulty in paying their bills over the next year.

Consumers are also wary of the future, with 86% believing that the unemployment rate will continue to rise. Datamonitor senior analyst Petter Ingemarsson said in a statement that a recession mixed with wary consumers can risk “fueling a vicious cycle”.

“These findings have important implications for the Reserve Bank’s attempts to stimulate the economy by lowering the cash rate”, he said.

Meanwhile, auction results around the country indicate the property market is continuing to remain steady, likely due to first-home owners rushing to cash in on Government grants.

In Melbourne, 439 properties were offered, with 256 selling at a clearance rate of 76%, just down from last week’s 77%. Total sales reached $216.57 million.

In Sydney, the city recorded a 70% clearance rate, up slightly from last week’s 68%. Out of the 201 properties on offer, 149 sold, reaching a sales total of $114.5 million.

Brisbane clearance rates rose from last week’s 44% to 47%, with 14 properties selling. Adelaide dropped 2 percentage points to 52% with 12 properties selling at a total of $5.9 million.

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