Mortgage stress on the way up

An alarming number of Australian households are facing mounting financial pressure as interest costs continue to outweigh improvements in employment. Over the past 5 years, the average Australian home loan has risen by 40%! As such, affordability has become a serious issue. To add further fuel to the fire, as interest rates continue to rise the Australian Economy will take a real hammering.

In February, the number of Australian households experiencing some degree of mortgage pain increased by 0.7%, taking the toll to about 581,000. This figure represents the greatest level of stress recorded since December 2008. Worse still, around 218,700 Australian households are at risk of having to sell, refinance or lose their homes. That’s 2% more than the figures recorded in January 2010.

The households worst off are those who recently entered the market, many of whom were first home buyers spurred on by a combination of low interest rates and government grants.

With the housing market as hot as ever due to increasing population growth and subsequent housing shortages, experts predict house prices will rise by as much as 12% over the next 12 months. If experts are correct, many Australians will be forced to relinquish their dreams of home ownership and continue to battle it out in the rental market.

 Happy Savings!

Dave Kaplan