What is
mortgage stress
Based on data from the 2001 Census,
more than one in ten Australian homebuyers are
experiencing 'mortgage stress', defined in this
Research
Note as a
situation in which homebuyers are paying 35 per cent or
more of their income on home loan
repayments.(1)
The basis for the
above definition of mortgage stress is the general rule
that financial institutions will not allow a household to
take out a housing loan if the monthly home loan
repayment, calculated over a 25 year term, exceeds
one-third of monthly household income. While it is
acknowledged that not all households paying 35 per cent
or more of their income in loan repayments are
necessarily experiencing stress (indeed, some homebuyers,
especially those on higher incomes, may be voluntarily
paying more than 35 per cent), mortgage stress in this
paper refers particularly to the high risk that a
stressful situation might arise.(2)
Reference
Press:
Mortgage stress? What
stress?
Break-ups increase mortgage
stress
