Housing Policy? Mortgage Stress Rises as Debt Soars for Older Australians


Rising mortgage debt in later life is a growing social and economic issue, reveals the Australian Housing and Urban Research Institute, affecting wellbeing, retirement wealth management and housing assistance programs.

Mortgage debt among older mortgagors increased by 600 per cent between 1987 and 2015, from $27,000 to over $185,000, according to the latest AHURI report.

While, demand for public housing from private renters aged 55-plus years, is expected to climb 78 per cent, from roughly 200,000 households in 2016, to 440,000 households in 2031.

The research, undertaken for AHURI by researchers from Curtin University and RMIT University, investigated the growing numbers of middle-aged and older Australians who are carrying mortgage debt into retirement and paying off higher levels of debt relative to house values and income.

“Our research finds that back in 1987 only 14 per cent of older Australian home owners were still paying off the mortgage on their home; that share doubled to 28 per cent in 2015,” Curtin University Professor, and report lead author Rachel ViforJ said.

“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.

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

Related: How Are Developers Responding to Australia’s Ageing Population?

Plans for retirement? The AHURI report found older Australian home owners still paying off their home mortgage increased to 28 per cent in 2015, compared to 14 per cent in 1987.
▲Goals for retirement? The AHURI report found older Australian home owners still paying off their home mortgage increased to 28 per cent in 2015, up from 14 per cent in 1987.

Toll on mental health

The implications go beyond financial.

Psychological surveys measuring mental health on a scale of 0 to 100 show that mortgage difficulties reduce mental health scores for older males by around 2 points and 3.7 points for older females.

“These mental health effects are comparable to those resulting from long-term health conditions,” ViforJ said.

“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.”

Related: The Business Case For Social Housing: Report

The report notes high mortgage debts later in life also present challenges for housing assistance programs.

The number of seniors aged 55-years and over, eligible for Commonwealth Rent Assistance is expected to increase 60 per cent in just over a decade, from 414,000 in 2016 to 664,000 in 2031.

As a result, the cost of rental assistance payments to the Federal budget is expected to increase from $972 million in 2016, to $1.55 billion in 2031.

“The burden of indebtedness in later life is growing; longer working lives and the use of superannuation benefits to pay down mortgages are increasingly likely outcomes,” the report notes.

The research findings will be presented at the biennial National Housing Conference held in Darwin this week.

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