While sufferers of mortgage stress have traditionally been defined as those who spend at least a third of their income on mortgage repayments, a debt researcher says this is outdated and claims up to one million Australian borrowers will be struggling to meet repayments by next year.
The author of a new report analysing mortgage stress, predicts 900,000 consumers will have to change their spending habits by September to cope with higher home loan rates.
"We had such low interest rates for so long that people had a false sense of security," Fujitsu Consulting managing consulting director Martin North said.
"Even if there were no further rate interest rate rises more people would fall into stress.
"Even if rates drop, the stress won't drop."
Reserve Bank boss, Glenn Stevens, agrees that the 30 per cent rule for determining mortgage stress is no longer accurate, particularly since very high income earners who choose to take out a large mortgage but still have plenty to live on could be classified as under mortgage stress using the one third repayment rule.
Join the discussion on Everything else about home loans
|