Latest news with #mortgage stress
News.com.au
a day ago
- Business
- News.com.au
Opinion: Reduce executive hours and save 30,000 jobs
ANALYSIS A recent report by Roy Morgan found that about 1.3 million Australians are currently experiencing mortgage stress. They desperately need a rate cut, but for tens of thousands, the only way to get decent mortgage relief may be to lose their jobs. One of the economic factors the RBA monitors closely when making cash rate decisions is unemployment and, ideally, it would like to see unemployment reach 4.5 per cent. Before the July decision to hold, unemployment was still at 4.1 per cent. Of course, the next set of data revealed it had jumped to 4.3 per cent, which meant there were about 30,000 more people out of work. With Australia's labour force around the 13 million mark, we'd need a similar number to lose their jobs again to get to 4.5 per cent. Are you one of the 30,000 odd Aussies who are still needed to take one for the team in order to bring about more mortgage relief? Of course, a rate cut won't do much for you if you have no income. The good news is that the 4.5 per cent figure doesn't need to be achieved immediately. RBA Governor Michele Bullock said she wants to see a gradual easing in employment. 'Having your hours cut is tough, but it's often preferable to losing a job altogether,' Ms Bullock said, while addressing a fundraising lunch last week. I agree. Perhaps we could begin by cutting Ms Bullock's hours so she works four days a week. That would take about $200,000 of potential spending out of the economy, or the equivalent of the jobs of two average wage workers. Ms Bullock would just have to tighten her belt a bit and make do with $800,000 a year. Luckily for her, she doesn't have a mortgage on her own home because she paid it off on a half price interest discount deal for RBA employees. Perhaps also Macquarie Bank CEO Shemara Wikramanayake could pro rata her $24 million earnings and get by on just $20 million a year? It will take a bit of adjustment, but if she scrimps and saves and perhaps packs her lunch a few days a week, she could save the jobs of 40 average Australians and help get relief for those with mortgages. Repeat the process for a few other of Australia's highest paid financial executives and we may actually save a few thousand average jobs. According to the ATO, there are nearly 15,000 Australians earning $1 million a year (bearing in mind, that's 'taxable' income, so likely a fair few more). If each of these went to a four-day week, it would mean 30,000 average salary employees could keep their job without any serious inflationary risk. Regular Aussies trying to pay off mortgages are always the ones who get punished in order to keep inflation under control. But doesn't it make much more sense to reduce the spending capacity of rich people who don't have mortgages?
Daily Telegraph
6 days ago
- Business
- Daily Telegraph
Bombshell way RBA interest rates relief is backfiring
Recent Reserve Bank rate cuts have been spurring home buyers to rack up larger amounts of debt – and now the pressure is boiling over, with households beginning to feel the strain. New Roy Morgan polling has revealed the proportion of households now at risk of 'mortgage stress' is level with figures reported in January – before the first of this year's two cuts were announced. About 28 per cent of mortgage holders were reported to be 'at risk' of mortgage stress in June, up from the period just after the most recent cut in May. MORE: 150 buyers for each home: house threat coming About 1.3 million Aussies are experiencing mortgage stress, 684,000 more people than in early 2022 – before the first of 13 interest rate hikes over that year and early 2023, according to Roy Morgan. Mortgage stress was defined as households spending a disproportionate or unsustainable amount of their incomes on keeping a roof over their heads. Roy Morgan chalked up the rise in stress to larger borrowing amounts taken out by people buying homes and larger amounts outstanding on home loans generally. It's an alarming twist to the economic relief meant to come from the RBA's double whammy of cash rate cuts, first in February and then again in May. MORE: Couple's power move gets them 18 homes, $11m Economists said mortgage stress levels surging back to where they were in January, before any cuts were made, was concerning. The figures suggest a brief dip in repayments offered by the RBA cuts was quickly swallowed up by borrowers stretching their budgets to the limit just to get into the market — or upgrade. Bigger debts have come as households battled a lethal cocktail of other ballooning costs, including skyrocketing insurance, council rates and power bills. It will take another 0.25 per cent interest rate cut to break the cycle of rising mortgage stress, Roy Morgan noted. Roy Morgan CEO Michelle Levine said households' rising debt levels were not surprising given recent home price rises. MORE: Bargain homes list exposes brutal Sydney truth She said the figures suggest recent cuts have only provided temporary relief for the mortgage market as a whole. 'These results show although reducing interest rates generally does lead to lower levels of mortgage stress, this effect may only be short-term as new buyers entering the market are able to borrow more money for larger loans to get into the market, thus leading to an increase in mortgage stress,' she said. Ms Levine said the outlook for mortgage holders over coming months looked more positive. Ten successive months of falling inflation, which has left inflation within the target range of the RBA, suggested more interest rate cuts could be coming, she said. MORE: Meet the 4yo Aussie homeowner with a $1m portfolio MORE: Crowd pressure home buyer to pay $550k extra Employment figures also provided some hope. 'It is important to appreciate that interest rates are only one of the variables that determines whether a mortgage holder is considered 'At Risk',' Ms Levine said. 'The largest impact on whether a borrower falls into the 'At Risk' category is related to household income – which is directly related to employment. 'The employment market has been strong over the last three years and this has provided support to household incomes, which have helped to moderate levels of mortgage stress over the last year.' PropTrack figures showed national home prices peaked in June after rising in every capital city. Rises were particularly high in Brisbane and Adelaide at a respective 8.3 per cent 9.8 per cent annually.
News.com.au
6 days ago
- Business
- News.com.au
Bombshell way RBA interest rates relief is backfiring
Recent Reserve Bank rate cuts have been spurring home buyers to rack up larger amounts of debt – and now the pressure is boiling over, with households beginning to feel the strain. New Roy Morgan polling has revealed the proportion of households now at risk of 'mortgage stress' is level with figures reported in January – before the first of this year's two cuts were announced. About 28 per cent of mortgage holders were reported to be 'at risk' of mortgage stress in June, up from the period just after the most recent cut in May. About 1.3 million Aussies are experiencing mortgage stress, $684,000 more people than in early 2022 – before the first of 13 interest rate hikes over that year and early 2023, according to Roy Morgan. Mortgage stress was defined as households spending a disproportionate or unsustainable amount of their incomes on keeping a roof over their heads. Roy Morgan chalked up the rise in stress to larger borrowing amounts taken out by people buying homes and larger amounts outstanding on home loans generally. It's an alarming twist to the economic relief meant to come from the RBA's double whammy of cash rate cuts, first in February and then again in May. Economists said mortgage stress levels surging back to where they were in January, before any cuts were made, was concerning. The figures suggest a brief dip in repayments offered by the RBA cuts was quickly swallowed up by borrowers stretching their budgets to the limit just to get into the market — or upgrade. Bigger debts have come as households battled a lethal cocktail of other ballooning costs, including skyrocketing insurance, council rates and power bills. It will take another 0.25 per cent interest rate cut to break the cycle of rising mortgage stress, Roy Morgan noted. Roy Morgan CEO Michelle Levine said households' rising debt levels were not surprising given recent home price rises. She said the figures suggest recent cuts have only provided temporary relief for the mortgage markets as a whole. 'These results show although reducing interest rates generally does lead to lower levels of mortgage stress, this effect may only be short-term as new buyers entering the market are able to borrow more money for larger loans to get into the market, thus leading to an increase in mortgage stress,' she said. Ms Levine said the outlook for mortgage holders over coming months looked more positive. Ten successive months of falling inflation, which has left inflation within the target range of the RBA, suggested more interest rate cuts could be coming, she said. Employment figures also provided some hope. 'It is important to appreciate that interest rates are only one of the variables that determines whether a mortgage holder is considered 'At Risk',' Ms Levine said. 'The largest impact on whether a borrower falls into the 'At Risk' category is related to household income – which is directly related to employment. 'The employment market has been strong over the last three years and this has provided support to household incomes, which have helped to moderate levels of mortgage stress over the last year.' PropTrack figures showed national home prices peaked in June after rising in every capital city. Rises were particularly high in Brisbane and Adelaide at a respective 8.3 per cent 9.8 per cent annually.
