How are Australian homeowners REALLY coping?

The results of Mortgage Choice’s 2016 Money Survey has provided a broader snapshot of homeowner sentiment.

With all the talk of late regarding the potential existence of an enormous Australian housing bubble apparently threatening to burst and drag property prices down as much as 50% across the country, as a homeowner you might be concerned.

But general fear-inducing assessments spruiked by one or two are often only based on a small sample of localities and can fail to reflect wider sentiment.

Nevertheless, popular media loves a horror story, so when such statements are made, you’ll probably hear all about them – particularly when housing market crashes are the flavour of the month thanks to a new Hollywood blockbuster, i.e. The Big Short.

Rather than jumping to the conclusion that we’re all in deep trouble because of problems in a handful of cases, the broader majority needs to be taken into account.



Australian Homeowner Survey Results

In February 2016, Mortgage Choice conducted an online survey of Australian homeowners. There were 1,030 respondents from all over the country – including both metropolitan and regional areas.  This survey helped to provide a broader picture of how Australian homeowners are handling their mortgages, and how they’re feeling about the property market.

Here are some of the survey’s key findings:

  • 87.9% said they are ‘comfortable’ with their current mortgage repayments – although 37.7% said they pay 31% or more of their monthly household income towards mortgage repayments, which means almost 2 in 5 are technically suffering mortgage stress.
  • 49.8% said they are ‘comfortable’ with their current financial situation, while a further 23.2% said they were ‘neutral’.
  • 40.6% said they are worried about how Australia’s economy will cope over 2016
  • On Australian housing prices over the next 12 months,
    • 32.5% expect an increase
    • 25.3% expect them to remain stable
    • 25.1% expect a decrease
    • 17% don’t know

Mortgage Choice CEO’s Response…

CEO of Mortgage Choice John Flavell told CANSTAR the survey data suggested that most Australian homeowners are feeling optimistic about their financial and personal circumstances.

“This year, a greater number of respondents said they feel confident about their financial situation and are happy with their level of savings,” he said.

“I believe low interest rates are serving to keep confidence levels high and optimism strong.”

Of greatest interest to Mr Flavell were how comfortable people were with their financial situation– with almost 50 per cent defining themselves as ‘comfortable’ and only 27 per cent as ‘uncomfortable’ (23.2 per cent were ‘neutral’).

“Last year, 47 per cent of respondents said they were ‘uncomfortable’ with their financial situation,” he said.

“This is a significant change to occur over the last 12 months and I believe it speaks volumes to the ongoing strength of the Australian economy.”

A note of caution though: with mortgage stress technically defined as contributing more than 30% of income to mortgage repayments, it is concerning to see around 38% of respondents in this situation.

Even so, Mr Flavell noted that this figure has dropped significantly in recent years.

“In 2015, 42% of Australians said they contributed more than 30% of their income to their mortgage, while  in 2014, 47% of people said they spent more than 30% of their income on their mortgage,” he said.

“Historically low interest rates have helped Australians to contribute less income to their mortgage, meaning fewer Australians are actually considered to be in mortgage stress.

“More importantly, if you asked the 38% of people who are currently spending more than 30% of their income on their mortgage whether or not they felt ‘stressed’, the vast majority would say no. Our research would suggest most Australians are comfortable with their level of debt.”

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