Money fears mount up

AUSTRALIAN households face serious economic risk from a triple whammy of mortgage stress, hidden levels of unemployment and insufficient savings for retirement.

A State of the Nation report by research firm Roy Morgan says the underlying problem of hidden mortgage stress, which triggered the global financial crisis, is still unsolved.

Chief executive Michele Levine said while other factors contributed to the post-2008 downturn, including “refusal to recognise and treat massive levels of hidden unemployment”, the issue remained.

“None of that has changed, so we should be looking very closely at mortgage stress and what might be the tipping points,” Ms Levine said.

With home ownership continuing a downward trend and house prices outpacing incomes, the issue of funding retirement will grow worse.

“The biggest wildcard for mortgage stress is unemployment,” she said.

Roy Morgan estimates unemployment is 10.5 per cent, and underemployment, or people wanting more work, is 9 per cent.

It says 80 per cent of homeowners earning less than $60,000 a year are classified as “at risk” of default.

Mortgage stress is also a concern for those over 60 paying off loans, single-income households and regional residents with lower-valued homes.

The report made several key points: HOME ownership is in decline, dropping from 72 per cent in 2000 to 65 per cent. AUSTRALIA has almost $1 trillion of mortgage debt. HOUSEHOLD incomes have not kept pace with home prices. SOME 14 per cent of owneroccupied mortgage holders are “at risk”, while 18 per cent are “extremely at risk”. A TYPICAL retiree has $250,000 in super, but experts recommend singles need $542,000 and couples $642,000,

Ms Levine said more than two in three mortgages relied on more than one income.

“(This) can present some problems if one drops out of the workforce,” she said.