A mortgage industry participant has found that although the threat of unemployment is forever present mortgage stress has fallen despite the global financial crisis.
The Australian has reported that after a survey recently conducted by Genworth the nations biggest insurer of mortgages, for banks and other lenders, that 17 per cent of borrowers had struggled to meet their mortgage repayments in the past 12 months, down from 23 per cent last year, due to lower interest rates.
According to chief executive Martin Barker the growth in arrears, where borrowers were behind in arrears, where borrowers were behind in their repayments was slowing, but that real concern was unemployment.
Trend has shown that small increases in unemployment can quickly change into repayment difficulties for home owners. The survey also found that Australians are paying off debt rather than spending.
As the first home buyer share of the market surged from 19.4 per cent last October to 29.5 per cent in May, the highest level since records began in 1991, the average loan size jumped by 6.4 per cent or $16,800 this is compared with 2.8 per cent for other home loans.
The survey also showed that the first home buyers grant had squashed 'a couple of years" of purchase into 9-10 months. This was a cause for concern because expectations of difficulty in making repayments were a lot higher in this segment at 19 per cent.
Mr. Barter also stated that although first home buyers were still spending there was less spending else where and that business's were reducing debt by laying off staff.
Aussie Home Loans on the other hand has reported a big increase in customers looking to refinance their loans after interest rate movements and market uncertainty had placed the issue as being the main concern with households. The owners have been complacent about their mortgages, but many were taking advantage of record low interest rates by seeking out the best available deal.
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