Mortgage Stress is more of a buzz word used by media outlets rather than having a specific definition. Usually the use of the phrase refers to a change in circumstances that would make a mortgage less affordable then perhaps it initially was when the mortgage was taken out.
Different factors affect people differently depending on their circumstances, and whether the mortgage is on an investment property or the property a person lives in as their principal place of residence.
For example, if rents were to drop in an area and an investor relied on that rent money to contribute to their mortgage payments, then this investor may experience Mortgage Stress if their personal income isn't sufficient to comfortably top up the payments. This example has more of an impact on investors rather then owner occupiers.
Another recent example is when banks increased interest rates out of cycle. This has caught many people off guard and has affects both investors and owner occupiers alike. The increased Mortgage payments associated with the rate rise will have a significant impact on those struggling to make ends meet. The increased cost to their budget is likely to increase the number of people experiencing Mortgage Stress.
It is predicted that the Reserve Bank of Australia will increase interest rates in the middle of 2019, with the banks predicted to pass on the rises in full if not more. If further interest rate rises are likely to affect the affordability of you Mortgage is may pay to act now. Get an appraisal on your property so you know what it is worth, and talk to your lender about locking in something affordable now.
