The great home ownership decline.
The great home ownership decline. Supplied

The rise and rise of mortgage debt in retirement

THE great Australian dream of owning your own home has become a nightmare and we are falling behind the rest of the world.  

The sharp fall in home ownership has been revealed in a new report, "No place like home: the impact of declining home ownership on retirement."  

The alarming findings showed more and more Australians will be retiring either never owning their own home or carrying a hefty mortgage debt.  

Written by independent economist Saul Eslake and commissioned by the Australian Institute of Superannuation Trustees, it also found we don't compare well to the rest of the world - our home ownership rate is at 27th globally behind countries including Romania, Croatia, Spain, Greece, Portugal, Italy, Sweden and Canada.  

The report's author Saul Eslake said many more people would need to dip into their super at retirement to wipe outstanding home loan debt.  

"We are on the cusp of seeing a significant increase in the number of people aged 65 and over who still have some mortgage debt,'' he said.  

"Or alternatively what will continue to happen is that when people reach retirement age they use their super to pay off their mortgage.  

"In turn that will mean their super won't do what it is meant to do."  

The report revealed substantial increases in the proportion of homeowners aged between 35 and 64 who still have outstanding home loan debt with much of it fueled by soaring house prices and more people taking on much larger loans.  

For those nearing retirement (aged 55-65) about 45% have mortgage debt, up from 29% in 1995-96.   And for homeowners over aged 65 about 10% have outstanding debt which has more than doubled from about four% in 1995-96.  

The Australian Institution of Superannuation Trustees' chief executive officer Eva Scheerlinck said the homeownership slide would continue to put more pressure on superannuation savings and led to more reliance on the aged pension.  

"Increasing numbers of retirees will use some, if not all, of their superannuation to discharge their outstanding mortgage which in turn will see more people rely on the aged pension,'' she said.  

"We need to look at mortgage lending criteria, are there ways that we can provide some sort of incentive for pensioners to downsize from their large homes into smaller homes and exempting them from stamp duty for example."  

She also quashed the idea to allow first home buyers to use their super to buy property and said it would merely inflate house prices even further.   


Age % with debt in 2013-14 % with debt in 1995-96
34-44 88% 67%
45-54 71% 40%
55-64 45% 16%
65+ 10% 4%

(Source: No place like home: the impact of declining home ownership on retirement report.)

News Corp Australia

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