Australian homeowners are now facing more mortgage stress than any other nation, an International Montetary Fund report suggests.
Mortgage stress refers to when more than one-third of a household income is spent on mortgage repayments.
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The IMF pulled together the statistics in 2022, before the Reserve Bank hiked interest rates a further four times.
This increased cost of borrowing has left Australia at the highest risk for debt along with Canada, Norway and the Netherlands.
However, experts say household loan spending in Australia could continue to jump to a huge 40 per cent if interest rates climb from the current cash rate of 4.1 per cent to 4.6 per cent.
“If households are starting to spend forty per cent or more of their income in keeping a roof over their head, that’s definitely a big concern and will leave families struggling,” Graham Cooke from Finder told 7NEWS.
However, the Reserve Bank of Australia said Australian households and businesses still remained well placed to weather a challenging set of economic conditions.
Mortgage stress refers to when more than one third of a household income is spent on mortgage repayments. Credit: AAP
“Incidences of severe financial stress are expected to increase but remain limited to a small share of housing borrowers,” the RBA report said.
In their report, renters were also found to be much more likely to be experiencing stress than other housing groups.
On the global stage, the risks to financial stability remained elevated.
A sharp increase in unemployment and a slowdown in advanced economies was also highlighted by the central bank.
Treasurer Jim Chalmers said Australia’s resilient labour market and well-regulated financial system would insulate the nation from challenging global economic conditions.
“We know Australians are doing it tough and higher interest rates will continue to bite, particularly as more and more households come off lower fixed-rate mortgages,” he said.
– With AAP