Unseen’ Housing Costs Emerge as Mortgage Stress Culprit
Hidden Costs Piling Up
While rising interest rates have been a major factor in the recent surge in mortgage stress, a new report has identified a range of ‘unseen’ housing costs that are also contributing to the financial strain faced by many homeowners.
The report, conducted by the Australian Housing and Urban Research Institute (AHURI), found that these hidden costs can add up to thousands of dollars each year, and can include:
- Body corporate fees
- Home insurance premiums
- Council rates
- Water and energy bills
- Maintenance and repairs
Impact on Mortgage Stress
The AHURI report found that these hidden costs can have a significant impact on mortgage stress, particularly for those on low incomes or with tight budgets.
For example, a household with a mortgage of $500,000 and an interest rate of 4% would pay approximately $1,700 per month in principal and interest repayments.
However, if that household also had to pay $500 per month in hidden costs, their total monthly housing expenses would increase to $2,200.
For a household on a budget of $6,000 per month, this additional $500 would represent a significant 8% increase in their housing costs.
Need for Greater Awareness
The AHURI report highlights the need for greater awareness of the true cost of home ownership.
Many first-home buyers and those considering purchasing an investment property may not be aware of the full range of costs involved, which can lead to financial difficulties down the track.
Financial counsellors and mortgage brokers can play a vital role in educating borrowers about these hidden costs and helping them to develop realistic budgets.
Conclusion
While rising interest rates have been a major factor in the recent increase in mortgage stress, unseen housing costs are also playing a significant role.
These costs can add up to thousands of dollars each year and can have a substantial impact on household budgets, particularly for those on low incomes.
Greater awareness of the true cost of home ownership is essential to help prevent financial difficulties for borrowers and to ensure a sustainable housing market.
Kind regards J. Ross
