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Rising mortgage stress is taking its toll

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Majority of Australians say they are being burdened by their home loans

A study commissioned by customer-owned Gateway Bank showed that most of Australians consider their mortgage to be a lifestyle-restraining burden.

With 56% of the respondents sharing the sentiment, the survey also gave credence to the Reserve Bank of Australia’s caution about rising mortgage stress levels in the country.

Gateway Bank CEO Paul Thomas said that these findings echo the consistent rise in household debt across the country.

“In the pursuit of getting their foot into the property market, some Aussies have become over-indebted, leading us to record high household debt-to-income ratios of 189%. Add to this the steep decline in household savings, which is currently at 1%, and you have yourself a recipe for mortgage stress,” he said.

Looking into the mortgage stress levels in each city, Adelaide residents had the highest percentage for mortgage stress across the nation, with 63% of respondents considering their home loans to be a burden. At the other end of the specturm, Sydney saw the lowest number of burdened homeowners, with only 54% being weighed down by their home loans. Other cities under this category were Melbourne (58%), Darwin (61%), Brisbane (61%) and Perth (62%).

On another note, the study found that people are attracted to towards an alternative means of property ownership – rentvesting.  Data revealed that, this year, 9% of those surveyed were renters who also owned investment properties. Half of those who identified themselves as rentvestors were Millennial, 38% were Gen X and 10% were baby boomers.

Thomas said that a lot of Aussies are engaging in rentvesting because of increasingly strict lending restrictions and a desire for more affordable routes of property investment.

“The Australian property market is flatlining for the first time in years and lending restrictions are tighter than ever before, so savvy Aussies are looking for other ways to get a foothold into the great Australian Dream.”

“It seems that for almost 10% of Aussies, rentvesting has presented an opportunity to enter the property market. However, prospective rentvestors should be wary before going down this path, as it does require a lot of consideration. When we look at data from our study this year, rentvestors are under a greater deal of stress (65%) than the general mortgage holder population, which is just a small indication of the challenges presented by rentvesting.”

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Wednesday, Feb 20, 2019
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