Mortgage stress: Young Sydney couple's eye-watering household debt

Roy Palleson and Rowena Ebona look like they don't have a care in the world ... until you remember their million-dollar debt. Photo / ABC

A young Sydney couple with an eye-watering level of debt have given a shocking insight into just how Australians have come to carry the second-highest level of household debt in the world.

Roy Palleson and Rowena Ebona have racked up seven properties in just two years, and more than A$1 million ($1.08m) in debt.

The Parramatta pair don't even own the apartment they live in; they're happily growing their investment portfolio and getting themselves deeper into the red.

Speaking with the ABC's Four Corners programme, the cheerful couple shared just how much they owed: "Currently $1.2 [million] across the five established properties," Ebona said.

"For the two land and build developments, they haven't registered yet, so when that comes, then that will increase."

If the couple were to close their investments and sell them, they'd just be able to pay off their debts, with the portfolio valued at a "conservative" $1.5m, Ebona said.

It already sounds like a concerning situation, not that you could tell from the cheery couple's smiling faces. But the clincher is their income.

"I earn about $60,000," Palleson says.

"I'm about $75,000 a year. So average," Ebona adds.

The couple's combined income is $135,000, and their debt is about 10 times that much.

Though they appear to have no concerns about their debt and plan to expand their investments to include 20 properties - "initially" - Palleson and Ebona appeared on the programme alongside couples and individuals whose lives have been ruined by bad investment decisions and mortgage stress.

Australia has a household-debt-to-income ratio of 190 per cent.

Banks hold at least 60 per cent of their loan assets directly to housing, and concern is growing that a housing downturn could have a disastrous effect on the Australian economy, and the nation's many mortgageholders.

Speaking with the ABC, financial data analyst Martin North said he had never before seen the "perfect storm" of issues that has put the Australian housing market, and wider economy, in such a precarious situation.

"We've got a very high household debt. We've got very high house prices. We've got households in some degree of difficulty already," he said.

"You only need a small consequential change, a small increase in the cost of fuel and stuff, to be able to actually really create that pain point.

"I cannot think of a single economy that's had a downturn with that much debt that it's not been a deep downturn."

At the moment one in four mortgaged households are in stress, meaning they do not have enough income to cover their repayments and living expenses. That's 820,000 households.

According to North's modelling, if interest rates rose by half a per cent, mortgage stress would jump to one in three households.

Four Corners found bank staff and mortgage brokers have to meet tough targets and some staff are "managed out" if they don't sign up enough mortgages.

ANZ chief Shayne Elliot said Australia's shocking levels of debt and mortgage stress was not the fault of the banks.

"I don't think that we've over-leveraged Australia," he said.

"There's a total alignment of interest here. The banks absolutely want to do the right thing. And because it's in our interest, we don't want to lend to people who get themselves into difficulty, because we get into difficulty.

"We have a responsibility. it's prudent for us to make sure that people can afford the debt that they're taking on."