More than 1.5 million Australian households are experiencing mortgage stress as the economy shrinks.

More than 1.5 million Australians are currently suffering from mortgage stress. They are forced into recession by weakening economic conditions and COVID-19 restrictions.

Digital Finance Analytics (DFA), released new data that showed that the mortgage stress rate rose to 40.2 per cent in August 2020. This amounts to 1.52 Million households.

DFA defines mortgage distress as households that are cash poor, not by traditional measures of income, but by total ingoings and outputs.

August’s data shows that 102 273 households in Australia are at high risk of defaulting on loans. The highest numbers are found in Victoria and Tasmania, as well as Western Australia.

More than 86,000 Tasmanian households are borrowers. This means that 48.8% Tasmanian households have financial stress. It is the most financially stressed country in America.

Victoria was second with 437,191 households. This is 44.2 percent of all households who are struggling to pay their mortgages.

Martin North, DFA Principal said that Victoria’s pain might be made worse by stage 4 restrictions.

“The August 2020 data from surveys continues to tell the sad tale of more households feeling pinches – regardless of whether or not they are renting, investing or mortgaged,” Mr North wrote.

“The numbers showed Victoria was suffering a slide, especially due the recent lockdowns and the increasing pressures on businesses there.”

Officially, Australia is currently in recession. More pain to come

Officially, Australia’s economy is in recession. June quarter data showed that Australia’s gross domestic product dropped by 7 percentage point.

The Australian Bureau of Statistics released data showing that the country’s GDP saw its largest drop in three consecutive months, from April to May. This is the first time that records have been kept since 1959.

The previous quarter – which recorded activity across January to March – Australia’s GDP fell by 0.3 per cent.

Recession is defined as a period in which GDP falls for two consecutive quarters.

Australia has suffered losses in several quarters. However, today’s results show that Australia is currently experiencing recession for the second time in 29 years.

Today, Treasurer Josh Frydenberg encouraged Australians to remember the human side of ABS statistics.

“Our record-breaking streak of 28 consecutive years has officially ended,” declared Mr Frydenberg.

“The cause? A pandemic that occurs only once every century. The result? The result?

“Behind all these numbers is the heartbreaking tale of hardship felt every single day by everyday Australians as they live their lives.”

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