The rise in living costs along with flag wages has led to nearly a million Australian households experiencing mortgage stress.

New information coming from Digital Finance Analytics (DFA) projected that April, over 963,000 households were now in mortgage stress, that’s 30.1% of all owner-occupied borrowing households.

Aside from that, over 55,600 households are now under extreme risk of going into a 30-day default phase within the next 12 months. Households are deemed as being under stress when net income does not cover ongoing costs.

Martin North, Principal of DFA, stated that mortgage stress was a “significant sleeping problem” that put a lot of Australians in dire straits as wage growth has remained still.

“We continue to see the number of households rising, and the quantum is now economically significant,” North said. “Things will get more severe, especially as household debt continues to climb to new record levels. Mortgage lending is still growing at two to three times income. This is not sustainable and we are expecting lending growth to continue to moderate in the months ahead as underwriting standards are tightened and home prices fall further.”

NSW had the most households that were experiencing mortgage stress with 262,577, followed by Victoria (256,353), Queensland (175,960) and Western Australia (128,600).

The most stressed postcode in the country was 4350, which is home to the suburbs of Toowoomba in Southern Queensland.

There, in areas such as Glenvale, Darling Heights and Westbrook, 7,080 households are in mortgage stress.

The second most stressed postcode is 2560, which is home to the suburbs of Campbelltown, Leumeah and Rosemeadow, a locale where 6,145 households are now in stress.

Gill North, professor of law at Deakin University and Principal at DFA, remarked that the recent disclosures of the Royal Commission indicate that banks have been lending too loosely for quite some time now.

“The issues highlighted by the RC represent only the tip of the iceberg and Australia is in for a bumpy and uncomfortable ride,” North disclosed.

“When the next housing or financial crisis hits (and the question is when and not if), the ensuing impact on the finance sector, many Australian households, and the broader economy will be severe. Yet most, if not all, of the financial institutions, the regulators, policy makers, and consumers still remain largely oblivious to what lies ahead.”

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