A New Report Unveils the Australian Suburbs Suffering From the Highest Degree of Mortgage Stress

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Those with a higher level of financial security are partaking in the hardship created by this pandemic, as hundreds of thousands of households find themselves under immense monetary stress.

A recent report has uncovered the Australian postcodes where homeowners struggle to make their mortgage payments. 

Otivo, a financial advisory firm, estimates that over 100,000 households in Australia will experience mortgage stress now that the Reserve Bank of Australia has declared its highest interest rate for nine consecutive months.

 With these skyrocketing costs, Australians must take heed and evaluate their financial situation before it becomes too late.

Paul Feeney, founder and CEO of Otivo, has determined that households with a $600,000 mortgage will now require an additional outlay of $1625 each month to repay due to the jump in official lending rates to 3.35 per cent.

He mentioned that the company’s data demonstrated that households usually considered “prosperous” were feeling more financial strain due to the sequence of rate hikes since last year.

Naturally, their mortgages are a lot higher, so the increase of interest over the past 10 months of 3.25 per cent has a much larger impact in dollar terms of what has to be found to keep up with those payments,” he said.

For the company, mortgage stress is defined as when households have to allocate more than a third of their income towards loan payments. 

Leveraging data from the latest census, demographic and health surveys, information from the Australian Taxation Office, Department of Social Services and online real estate listings, Otivo was able to accurately calculate how many households in designated postcodes are currently facing financial difficulty.

Financially struggling households should always keep in mind to save at least 5% of their income as an emergency fund, advised Feeney. They must be prepared for further hikes in interest rates. Doing so will help them achieve financial stability and better manage challenging times.

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