Massive household debt generating mortgage stress

New research has revealed Australians are worried about repaying their home loans, with household debt reaching 25-year highs.

The Australian Bureau of Statistics reported that the level of household debt at the end of 2013 was $79,000 per person, which it said was higher than at any time in the past 25 years.

Household debt has increased nearly twice as fast as the value of household assets during that time, according to the report.

However, the rate of increase in household debt per person in Australia has slowed since the GFC from an average 10 per cent per year between 2001 and 2007 to two per cent per year between 2007 and 2013.

The ratio of household interest repayments to income is higher than at most other times in the past 50 years, although it is lower than at its highest point in 2008, the report said.

Meanwhile, a survey of 2,114 Australians by credit union CUA found widespread mortgage concern, according to chief executive Chris Whitehead.

“The research shows that seven out of 10 people who are considering taking out a home loan in the next 12 months are worried about being able to make their repayments and believe they will have to make sacrifices to meet repayments,” he said.

“Almost nine out of 10 people with a home loan said they are making sacrifices to meet their repayments, with almost half this number making big sacrifices such as foregoing holidays, new cars and entertainment.”

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