Mortgage Stress
It is interesting and quite scary to note that the median house price in Sydney is now more than $1.1 million – scary because that means that Mortgage Stress will be on the rise. Rising house prices can and will make homeowners feel wealthier, the larger price of entry has some troubling effects for those who are still trying to buy and possibly ‘punching above their weight. Mortgage Stress can be defined and quantified as when mortgage payments equate to 35% or more of pre-tax income. It is currently estimated that nearly 1/3 of Australians are currently experiencing Mortgage Stress – which is deeply troubling considering the historically low levels of interest rates. Another more prudent definition of Mortgage Stress is when on your home loan repayments and overall household expenditure does not meet household income.
Are you in mortgage stress?
Recent Census statistics indicate that NSW’s median monthly mortgage repayment was just shy of $2,000. Below are are some warning signs of potential Mortgage Stress. • If you pay greater than 30% of your pre-tax salary to service your home loan • Only pay interest only on your home loan •Have difficulty to pay your utility bills • Pay all your bills on your credit cards • Only pay the minimum amount due on your credit cards
If any of the above situations relate to you then there is a good chance that mortgage stress has most probably set in and you could be getting on the home loan roundabout – better to attempt to address these issues and develop strategies to mitigate against any sudden interest rate rise. This also highlights the need to review your mortgage every 2 years. Always there to help out in any way – feel free to reach out. 