Around one-third of home loan borrowers are at risk of mortgage stress, according to new research.
Roy Morgan said that in the three months to January the proportion of borrowers in its “at risk” category reached 1.6 million, or 31 per cent of all home loan borrowers.
The number is up from 1.56 million in September last year and 759,000 in May 2022, when the Reserve Bank started increasing the cash rate.
The number of borrowers at risk is a record but the proportion is still below the 35.6 per cent at risk during the financial crisis.
Roy Morgan measures mortgage stress in two ways: borrowers are at risk if their mortgage payments are greater than a certain percentage of after-tax household income (25 to 45 per cent, depending on income and spending); and they are considered extremely at risk if the interest component of their payments is over those percentages.
The number of borrowers extremely at risk hit 994,000, representing 19.8 per cent of home loan borrowers.
Roy Morgan chief executive Michele Levine said in a statement: “The variable that has the biggest impact on whether a borrower falls into the at risk category is household income, which is directly related to employment.
“The employment market in Australia has been exceptionally strong over the last year and this has underpinned rising household incomes, which have played a part in reducing overall mortgage stress in January.”