Financial stress 'through the roof' as interest rate hikes come home to roost (2024)

A record number of younger Australians are reaching out for financial help as rents and mortgage payments soar, according to new figures from the National Debt Helpline.

Financial counsellor Mike Dunkley said he is experiencing his busiest time at the National Debt Helpline (NDH) in Sydney's Surry Hills.

"I've been on the NDH now for 2.5 years and I reckon this is the busiest I've ever seen it."

Calls started ramping up late last year as higher interest rates started to bite.

"It's going to be three things [people call in about]: number one: mortgages; number two: lots of rent; and lately, for probably the last five or six months, it's the ATO," Mr Dunkley said.

The financial year just gone saw a total of 145,166 calls to the National Debt Helpline — the highest number of calls in four years.

But those in financial distress can also use the helpline's online chat service.

Mr Dunkley said the call centre's figures show, so far this year, the number of chat users should soon surpass the total number of users last calendar year.

Over 60 per cent of chat users are aged between 18 and 39, and the majority of this cohort are women struggling with paying the rent.

But with no hardship provisions, Mr Dunkley said there aren't many options for those callers.

"There's nothing we can lean on for that, basically you're talking to the landlord.

"And so [we're] finding it difficult to find options for people who have got rental arrears."

Growing strains

A phone conference of financial counsellors last week found mortgage and rent stress ramping up across the country.

Financial Counselling Australia CEO Peter Gartlan said mortgage payments and rents are sending many families into financial crisis.

"The amount of calls that are coming through this year are equivalent to 2020 figures, which is just prior to COVID.

"So what that said to us is, for the financial year just gone, we had over 145,000 calls.

"This year month-on-month those calls are increasing.

"And, as well as the chat function, and the demand generally on financial counsellors has gone through the roof in recent times," Mr Gartlan told the ABC.

Big picture

Data from the big four banks and the Reserve Bank finds financial stress increasing, but not at an alarming pace.

For example, the RBA's latest Financial Stability Review shows 'nearly all borrowers continue to service their debt on schedule'.

But Mr Gartlan doesn't think that analysis tells the full story of national financial stress.

"What the banks are saying is that approximately 75 to 80 per cent of mortgage holders are in front of their mortgage.

"What that means of course is that 20 per cent are not.

"So we are seeing that those are the people that are ringing us," he said.

He believes many mortgage borrowers fear the banks.

"Our overall impression is that people aren't going to the banks simply because they're scared.

"And they're doing everything they can to avoid getting into arrears.

"And the way they're doing that at the moment with a very strong employment market is either working extra hours or taking on a second job," he said.

As for renters, the evidence points to their financial challenges mounting from here.

Recent data from property analysis firms CoreLogic and PropTrack show national rental price rises, on average, of up to 10 per cent last financial year.

Domain's Rent Report for the June quarter shows the year-on-year rental price increase for combined capital cities of 11.1 per cent.

"We're just finding all around that these cost-of-living indicators are really biting," Mr Gartlan said.

"I wish I had a magic wand to tell you it's going to get better, the simple answer is we don't know.

"In part it's the decision of the Reserve Bank coming up, but we are finding that people are doing it tough and we don't see any light at the end of the tunnel," he said.

The Reserve Bank next meets to make a decision on interest rates in early August.