THOUSANDS of mortgage holders are dipping into superannuation in a bid to avoid losing their homes.   

As welfare groups - and Labor MPs - warn of a growing underclass, more than 5000 people have applied for early access to their retirement nest eggs since July 1 last year.

About $75 million is expected to be released this year to home owners as a last resort to meet overdue mortgage payments and avoid foreclosure.

Financial counsellors say they are hearing from increasing numbers of people who are desperate to hang on to their most precious asset.

The battle to keep the family home reflects concerns that more people are falling into poverty as housing affordability drops and weekly living costs increase.   

The Australian Council of Social Service reported a 30 per cent hike in people seeking access to emergency payments over Christmas. 


Labor MPs are also reporting an increase in the number of people asking for handouts from welfare centres. "It's as bad as they have seen it," one Government MP said, of the feedback from local groups.

The Australian Prudential Regulation Authority reports that 5008 people applied for early access to superannuation in the eight months from July 2010 to February.

Just under $50 million had been released, meaning the full-year result is on track for $75 million to be handed over to struggling home owners.

In 2009-10, $64 million was paid out by APRA - at a time when households were just getting over the global financial meltdown.

Nearly 1500 people applied in January and February, with the regulator approving the release of $12.6 million.

A further 2582 people had accessed super to pay for emergency medical treatment since July last year, with APRA approving the release of $13.4 million.

Under federal laws, home owners can apply to APRA for access to super funds provided they can prove a bank or other lender is about to foreclose on the family home.