The Reserve Bank of Australia’s decision to cut interest rates by 0.25% to 4.25% is welcome news for the 36% of Australian households with a mortgage, however it won’t do much for the 29% of households who are renting, or the 32% who own their home outright.
AAH Campaign Manager Sarah Toohey said that the interest rate decision wouldn’t help those striving to buy a home either.
“Mortgage repayments are a function of interest rates and how much people have to borrow, so interest rates are only half the picture. The fact is that people have to borrow more just to get into the housing market. Governments need to look at the structural problems that drive up house prices.” said Campaign Manager Sarah Toohey.
“According to data from the Reserve Bank of Australia, households are paying more of their income on housing interest payments now than they were back when interest rates were at 17%. That’s because households have had to borrow more to get into the housing market”.
The extent of housing stress across regional Victoria has today been revealed by Australians for Affordable Housing (AAH). Renters and home purchasers are struggling with high housing costs according to new modelling commissioned by AAH.
“Housing is the single biggest cost of living pressure in Australia. When low-income households spend more than 30 per cent of their income on housing costs they are officially in housing stress. This means they have very little left over to cover other costs like food, transport, bills or money for emergencies”.
Mildura is the hardest hit, with close to 20 per cent of households experiencing housing stress, Sarah Toohey, AAH Campaign Manager announced today.
“Renters are doing it even tougher than those with a mortgage. More than 45 per cent of renters in Mount Alexandra, Central Goldfields and Hepburn are experiencing housing stress,” Ms Toohey said.