New research by Roy Morgan reveals that 1,604,000 mortgage holders (29.8%) were ‘At Risk’ of mortgage stress in the three months leading to July 2024, a slight decrease due to Stage 3 tax cuts boosting household income. Despite this improvement, future reductions in mortgage stress 

are uncertain, as the Reserve Bank of Australia (RBA) may raise interest rates in September, potentially reversing the trend. 

Mortgage stress reached a record 35.6% in 2008 and has surged by 797,000 people since May 2022, when interest rate hikes began. Current interest rates stand at 4.35%, the highest in over a decade. An estimated 982,000 mortgage holders (18.9%) are now ‘Extremely At Risk,’ exceeding the 10-year average of 14.5%. Roy Morgan estimates that the number of mortgage holders ‘At Risk’ will decline slightly in August but rise again if interest rates increase by 0.25% in September. By October, this could result in 1,619,000 mortgage holders (30.1%) facing stress. 

While interest rates play a significant role, Roy Morgan emphasises that unemployment is the key factor influencing mortgage stress. The recent tax cuts are expected to provide temporary relief, but continued employment strength will be crucial in maintaining manageable mortgage payments for many Australians. 

What impacts will it have on Berries? – Berries are lucky to a certain degree that many of their customers are less impacted by mortgage stress (highly affluent). Still, it does mean we could have a significant portion of the middle class consuming less than they usually would as they need to stretch their dollars further and these are the customers who will be into the category at peak and on the shoulders. 

(Source – https://www.roymorgan.com/findings/9657-mortgage-stress-risk-july-2024)