A new report has found that close to half of all Australian mortgage holders are spending more than they earn because of rising interest rates and the soaring cost of living.
This is a worrying trend that could see many families struggling to keep up with their mortgage repayments and ultimately falling into debt.
The report by Digital Finance Analytics (DFA) found that about 45% of mortgage holders in Australia, or 1.7 million borrowing households, are currently struggling to cover higher expenses brought about by six months of interest rate hikes and surging inflation. Many are dipping into their savings or relying on credit cards to make ends meet.
Families appear to be prioritising loan repayments over healthcare and education costs, according to survey-based analysis. This is likely due to concerns about future interest rate rises.
Martin North, principal of Digital Finance Analytics, said that the number of households in mortgage stress had increased significantly from pre-Covid levels of 32 percent, and 10-20 percent in the early 2000s.
It’s not just mortgage holders who are struggling, either. Renters are also finding it difficult to make ends meet, with many being forced to move back in with their parents or take on multiple jobs just to afford their rent.
The situation is only going to get worse, too. With interest rates expected to rise again in the near future, and the cost of living continuing to increase, more and more people are going to find themselves in financial difficulty.