Older Aussies hit with 600% more mortgage debt

By Grace Ormsby

August 27 2019
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The average mortgage debt among mortgagors aged 55 and older has skyrocketed by 600 per cent since 1987, new research has unveiled.

The finding, from the Australian Housing and Urban Research Institute’s Mortgage stress and precarious home ownership: implications for older Australians, has painted a grim picture for the growing number of older Australians who are carrying high levels of mortgage debt into retirement.

Between 1987 and 2015, the research showed that the average real mortgage debt among Australians aged 55 and older had ballooned from $27,000 to $185,000.

When factoring in wage increases and inflation, the report also showed that the average mortgage debt to income ratio for those aged 55 and up has also tripled.

In 1987, mortgage debt to income ratios for the age group sat at 71 per cent.

By 2015, the average mortgage debt to income ratio was 211 per cent.

Additionally, the research found that back in 1987, only 14 per cent of older Australians were still paying off the mortgage on their home.

According to the report’s lead author, Professor Rachel ViforJ of Curtin University, “that share doubled to 28 per cent in 2015”.

“We’re also seeing these older Australians’ mortgage debt burden increase from 13 per cent of the value of the average home in the late 1980s to around 30 per cent in the late 1990s when the property boom took off, and it has remained at that level ever since,” she continued.

Over that time period, average annual mortgage repayments have more than tripled from $5,000 to $17,000 in real terms, the scholar said.

The impact on health

The report also flagged that when older mortgagors experience difficulty in meeting mortgage payments, wellbeing declines and stress levels increase.

Psychological surveys used to measure mental health on a scale of zero to 100 revealed that mortgage difficulties reduced mental health scores for older men by around 2 points, while mortgagor women were affected by 3.7 points on average.

Professor Viforj called out these mental health effects as “comparable to those resulting from long-term health conditions”.

“As growing numbers of older Australians carry mortgages into retirement, the rising trend in mortgage indebtedness will have negative impacts on the wellbeing of an increasing percentage of the Australian population.”

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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