Mortgage repayments remain steady amid job security: NAB

Amid rising interest rates and inflation, a recent survey has revealed that Australians are experiencing higher levels of financial stress and hardship in the second quarter (Q2) of 2023.

NAB’s Consumer Insights report for the quarter ended June 2023 indicated that over four in 10 (43 per cent) Australians encountered some form of financial hardship in Q2, a notable increase from 29 per cent reported in early 2022.

The primary cause of financial stress was the inability to cover emergency expenses, impacting one in four individuals in Q2.

While signs of financial stress and hardship are evident due to the rising interest rate environment, mortgage arrears remain low, mainly due to the record low unemployment rate in Australia, which is supporting mortgage borrowers in paying off their debts for now.

In fact, NAB’s data showed that the number of Australians unable to make mortgage repayments remained unchanged at 6 per cent, marking an increase from 4 per cent compared to the same period last year.

However, the survey also revealed an increased number of people who missed a bill or loan payment during the June quarter.

The most commonly missed payments were for electricity, gas, or water bills (12 per cent), followed by phone or internet bills (11 per cent), loans from family or friends (10 per cent), and credit card payments (9 per cent).

Additionally, 8 per cent of respondents missed payments on buy now, pay later (BNPL) or insurance plans.

This coincided with Equifax’s data, which showed a significant decline of 26.3 per cent in the demand for BNPL applications during the same period, reflecting the impact of multiple interest rate rises on Australian home owners, alongside a 2.8 per cent drop in mortgage applications in the June quarter.

NAB’s survey results indicated that the average Australian feels their financial wellbeing is only “moderate”, with a notable number feeling uncertain about their ability to manage a major unexpected expense or meet future financial needs.

A significant portion of the population, 30 per cent, expressed that they do “not at all” feel prepared to handle a major unforeseen cost and 20 per cent felt they were “not at all” in control of their day-to-day finances or future financial security.

[Related: Mortgage applications down amid financial hardship: Equifax]