The number of Australian homeowners facing mortgage stress is at a near-record high, but is set to drop in the coming months as the stage 3 tax cuts provide much-needed financial relief to households.
According to Roy Morgan, 30.3 per cent of all mortgage holders, or just over 1.6 million people, are at risk of falling into stress as of June – an increase from May but lower than the 16-year high reached at the start of 2024.
While households are continuing to feel the bite of the cost-of-living crisis, the pollster expects that number to drop in the next few months.
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It says the stage 3 tax cuts, which came into effect on July 1, will have such a positive effect on the country’s finances that they’d be enough to offset the impact of two interest rate rises in the coming months.
“Although interest rate increases would normally lead to a higher level of mortgage stress, the stage 3 income tax cuts delivered to millions of Australians in early July are set to have a larger impact in driving down mortgage stress over the next few months,” Roy Morgan CEO Michele Levine said.
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“Even if the RBA increases interest rates by 0.25 per cent in both August and September to 4.85 per cent, the level of mortgage stress would still drop by 24,000 to 1,578,000 mortgage holders (29.8 per cent) considered at risk in the three months to September 2024…
“The stage 3 income tax cuts are delivering significant financial relief, and a boost to take-home pay, for millions of Australian taxpayers – including many mortgage holders.”
But while Roy Morgan expects homeowners to find the going a little easier as the end of the year approaches, it still drew attention to areas of concern in the economy.
READ MORE: Rattled by rising rates, 165,000 home owners may be forced to sell
More than a million Australians, or 20 per cent of mortgage holders, are now at extreme risk of stress, well up on the 10-year average of 14.5 per cent, while the amount of stress in the property sector has increased markedly in the last two years.
“The figures for June 2024 represent an increase of 795,000 mortgage holders considered at risk since the RBA began raising interest rates over two years ago in May 2022,” Levine said, adding that persistent inflation is only making life more difficult.
“Key inflation indicators such as petrol prices remain high,” she said.
“For the first time in history, average retail petrol prices have been above $1.80 per litre for a record 53 straight weeks – over a full year.”
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