It’s official: the unrelenting burden of mortgage debt is leading to significant mental stress for older Australians.  And the strain is not likely to ease any time soon.

According to findings from Curtin University, almost half of 55 to 64 year-olds are still paying off their home loan.  And it’s predicted that in the next decade or so, more and more of these Aussies will be requiring rent assistance as they are forced out of their homes.

Over the past 25 years, the average mortgage debt has risen by a whopping 600%!  One of the main drivers is, of course, the significant rise in housing prices.  Property values have been increasing at a much faster pace than incomes, leaving homebuyers having to take out higher mortgage debt.  Curtin University’s Professor Rachel Ong ViforJ estimates the current mortgage debt to income ratio to be around 200%.  In other words, the average debt is DOUBLE the income of mortgagees.  Compare that to the rate 20-25 years ago at only 70%, and you can see why the Great Australian Dream is rapidly slipping away.

So, you’d have to take your hat off to people for trying to find a way out of this dilemma, though the strategies they’re employing are not exactly doing them any favours.

Many older Aussies are expecting to either work longer or draw down on their super.  But neither plan of attack is a sustainable solution.  The assumption that they can work for as long as they like does not take unexpected illness or lay-offs into consideration.  And those hoping to draw down their super upon retirement are merely eating into their future savings – money which is meant to see them through well into their golden years.

It’s hardly surprising then, that older mortgagees are suffering increased levels of mental health issues compared to those who already own their home outright.  And it appears to be more severe amongst women than it is amongst men.

The sad news is a number of older Australians are likely to need the government’s help with housing and rent assistance after mortgage stress tips them out of homeownership.  Studies anticipate that about 650,000 older Australians will need this financial assistance by 2021, with a likely risk of insufficient or secure housing in the private rental sector, and an increase in homelessness a very probable outcome.

The idea of vagrancy or even carrying unsustainable mortgage repayments into retirement is enough to bring you to your knees.  Luckily, GSA has a two-pronged solution: pay off your debt sooner AND grow your retirement nest egg faster.  Think of us as your financial shrink. Call us to find out how we can help end your financial anguish.