Australia has a rule of thumb for mortgage stress. Here's where it falls short
The 30:40 mortgage indicator is often used to define mortgage stress in Australia. Experts say the rule isn't rigid.
Australian research reveals that the average borrower allocates 38% of their post-tax income to mortgage repayments each month. Out of the 1,000 surveyed Australians aged 16 and above, 55% experienced mortgage stress, which is defined as spending over 30% of income on home loans. While the 30:40 rule—comparing mortgage repayments to gross income—serves as a common gauge of housing affordability, experts caution that it's not a definitive indicator.
Factors such as income level, household expenses, and demographics play a significant role in determining an individual's ability to manage mortgage payments. Single-parent households and those with dependents are particularly vulnerable, as they often struggle to balance housing costs with other essential expenses.
Written by urgent.news from SBS News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
