Soaring mortgage debt causing headaches for older Australians

Older Australians are suffering mental health problems and psychological distress because of soaring mortgage debt, new research shows.  

A report from the Australian Housing and Urban Research Institute (AHURI) found the average real mortgage debt among Australians over 55 has skyrocketed by 600 per cent in recent decades, from $27,000 in 1987 to more than $185,000 in 2015.

Researchers studied the links between mortgage stress and personal wellbeing, with older mortgagors reporting lower mental health and higher psychological distress than older outright homeowners.

Lead researcher Professor Rachel ViforJ said while in 1987 only 14 per cent of older home owners were still paying off a mortgage, this rose to 28 per cent in 2015.

“We’re also seeing these older Australians’ mortgage debt burden increase from 13 per cent of the value of the average home in the late 1980s to around 30 per cent in the late 1990s when the property boom took off, and it has remained at that level ever since,” ViforJ said.

“Over that time period, average annual mortgage repayments have more than tripled from $5,000 to $17,000 in real terms.”

The report found that older people who had difficulty meeting mortgage payments suffered a decline in their wellbeing and rising stress levels.

Psychological surveys measuring mental health on a scale of 0 to 100 revealed that mortgage issues reduced mental health scores by around 2 points for older men and 3.7 points for older women.

These mental health effects were described as comparable to those resulting from long-term health conditions.

“As growing numbers of older Australians carry mortgages into retirement the rising trend in mortgage indebtedness will have negative impacts on the wellbeing of an increasing percentage of the Australian population,” ViforJ said.

High mortgage debts have also caused headaches for housing assistance programs, with the number of people over 55 eligible for Commonwealth Rent Assistance expected to rise from 414,000 in 2016 to 664,000 in 2031.

Unmet demand for public housing from older private renters is also expected to jump over this period from 200,000 households to 440,000 households.

Kate Colvin, a spokesperson for housing group Everybody’s Home, said the research highlighted the growing threat of homelessness facing older Australians.

“AHURI [research] shows increasing numbers of older Australians are retiring with unsustainable mortgage debt, leading to anxiety and worsening mental health outcomes as they age – and for too many, homelessness,” Colvin said.

“It’s time for national leadership to solve what is a truly national crisis.”

Council on the Ageing (COTA) used the findings to call for a concerted national focus on housing reform.

COTA CEO Ian Yates said spiralling housing costs, a lack of suitable housing options and under-investment in affordable housing was hurting older Australians.

“Sadly, homelessness among older Australians, especially women, is increasing at an alarming rate as more people retire without owning their own home,” Yates said.

 “This report from AHURI reveals how widespread housing stress is among older people, that it’s increasing, and is impacting every generation.”

The full report can be seen here.