One in four would default on mortgage if cash-strapped

by Adam Smith20 Mar 2012

Families are increasingly relying on credit to pay the bills, and more than a quarter would default on a mortgage payment if short of cash.

New research from Dun & Bradstreet has found 41% of Australian households with children will have to turn to credit cards to cover living costs. The result is up 2% on last year.

Low-income households have been hardest hit. Forty-six per cent of low earners expect to have difficulty managing their debt, up 8% from the fourth quarter of 2011 and 11 points above the national average.

"Unfortunately, we are seeing the least solvent consumers accumulating unmanageable levels of debt, while those best able to meet credit commitments are avoiding spending altogether," Dun & Bradstreet chief executive Gareth Jones said.

Of those households who find themselves unable to meet their obligations, 12% would default on a mortgage repayment or internet bill, and 14% said they would choose to default on their pay TV account. Overall, 26% of households said they would default on a mortgage payment if they found themselves in a difficult financial predicament.

Low income earners show concern over their ability to meet debt repayments, often forcing them to take on more debt," Jones said.

"Nearly one-in-three low-income households expect rising household debt levels, but with limited ability to pay this down. When consumers are increasingly forced to accumulate debt they are unable to manage just to keep family finances afloat, this has the potential to quickly become a vicious cycle," Jones said.


  • by peter velty 20/03/2012 10:51:36 AM

    This is the reality that is set to become one of the largest financial problems in less than 2yrs,debt agreements and part nine bankruptcys will become wide spreed as it already is effecting a large amount of people in the 45 to 50 yrs old bracket................