Victorian mortgage stress and interest rates put homes on the brink
Herald Sun
April 23, 2017


HUNDREDS of thousands of Victorians are under mortgage stress, and many more will be pushed to the brink of defaulting on their loans if banks continue to push up interest rates.   

Data crunched for the Herald Sun shows 300,000 homeowners are struggling to afford their mortgage repayments, a figure that would almost double if rates were to rise by 2 per cent.

RATES ON HOLD, RBA TAKES SWIPE AT LENDERS

As the federal government scrambles to tackle housing affordability in its upcoming Budget, ­economists warn interest rate rises will hurt those who have managed to get on the property ladder.

Modelling produced by Digital Finance Analytics shows workingclass families who own homes in Narre Warren, Craigieburn, Endeavour Hills and Berwick are facing the most mortgage stress.

Even a 0.5 per cent interest rate hike would put an extra 50,000 owner-occupiers and investors under pressure in Victoria. The big banks have started to increase rates out of cycle with the Reserve Bank.

Digital Finance Analytics principal Martin North said he was certain rates would keep going up over the next 18 months.

“We have a lot of households today who are on the edge,” he said.
Narre Warren home owners are under major stress.

“They’re managing to make their repayments, but they’re spending less at the shops, cutting back on other things, putting more on credit cards and hunkering down.”   

Mr North said the combination of slow wage growth, household debt, interest rate rises and cost-of- living increases could put Australia on the cusp of a financial crisis.

“We almost need a housing correction because I don’t think regulators can solve the equation,” he said. “There’s a crash that we have to have.”

The Reserve Bank raised concerns earlier this month that a third of borrowers were a month away from missing their repayments.

RBA HOMING IN ON PROPERTY MARKET

“One-third of borrowers have either no accrued buffer or a buffer of less than one month’s repayment,” a Reserve Bank report noted.   

The Digital Finance Analytics modelling relies on a rolling household survey, and data from banks and regulators, to look at people’s cashflow. It found more than 552,000 people would face mortgage stress if rates were to rise by 2 per cent, including 231,000 owner-occupiers and 321,000 investors.

Investors in Tarneit, Cranbourne, Deer Park and Glen Waverley are struggling the most with repayments.

Wait until they reach 14-15% again in the New Recession We Had To Have - a recession that in no way affected Keating... unless it was positively.

I recall that one - I was dumped out of work for a couple of months and onto unemployment - every cent virtually went to my mortgage and I near starved rather than lose my home.

But men were men then....

When people start spending less on gambling, booze and ciggies we can start believing that there is a problem with house prices.

Rider wrote on Apr 24^th, 2017 at 5:25pm:


Good one.
So-called investors live beyond their means also.
Pricing their kids out of the market causes their kids to wish their parents dead. So be it.
Stop making your children wish you to die....bwahaha!
Not a real good investment  IMO.

They may have a better idea. No doubt.