1 in 3 borrowers struggles with financial hardship

Around one in three Australian home loan borrowers suffered some kind of financial hardship over the past three months, according to new research from NAB.

The study found that while there Australians are generally coping well financially, 36% said they went under some kind of financial struggle in recent months. This was a slight increase from 35% in the previous quarter and 29% at the start of the year.

NAB personal banking executive Mark Baylis said the findings were consistent with what customers were telling NAB Assist team.

“Most of our customers are in a good financial position but there are some pockets of concern,” he said.

Mr Baylis said lenders have a critical role to provide support to home loan customers amid the challenges of rising interest rates.

“While 70% of home loan customers are ahead on their repayments, I encourage anyone concerned to speak to their bank early,” he said.

The NAB study delved into the state-by-state incidence of financial hardship and found that struggles are evident for borrowers in Western Australia (45%), South Australia and Northern Territory (38%), and in Victoria (37%).

On the other hand, instances of financial hardships among borrowers declined in New South Wales, ACT, Queensland, and Tasmania.

“Regardless of what challenges they face, NAB listens to each customer’s situation and can offer tailored solutions, which can include a reduced payment arrangement, payment break or restructuring their loan,” Mr Baylis said.

“The earlier a customer gets in touch with us, the quicker we can help. In fact, throughout this year, 97% of our customers were back on track within 90 days of receiving assistance.”

A separate report from Roy Morgan showed that 948,000 or around 21.1% of all mortgage holders are considered “at risk” of mortgage stress over the September quarter, which covers three months of consecutive 50bps rate hikes.

Meanwhile, the number of borrowers considered “extremely at risk” increased to 611,000 or 14.1% during the quarter.

It is crucial to note, however, that the share of mortgage holders in both risk categories was still below the high reached during the global financial crisis and the long-term average over the last 15 years.

—

Photo by Andrea Piacquadio on Pexels.