Rise in average loan size pushes up mortgage stress
By
Luke Cornish
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12/03/2010 12:00:00 AM
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Strong demand for property caused by rising migration and a return of investors has kept upward pressure on home prices and forced borrowers to take on large home loans resulting in an increase in the number of Australian households suffering from mortgage stress.
The number of Australian households experiencing some degree of mortgage stress rose by 0.7% this month to 581,000 according to the latest report by Fujitsu Consulting.
Despite being up on the month, this result compares favourably to the peak of the crisis in August 2008 when 900,000 households were suffering some degree of mortgage stress.
"Severely stressed households (those facing a potential sale or foreclosure, or forced refinance) rose by a further 2% driven by interest rate rises, flat income levels and cost of living increases," the report said. "Employment prospects are brighter, but at least 218,000 households are still at risk of having to sell, refinance or lose their homes."
Mild stress fell slightly in response to continued improved investment performance in recent weeks supported by more favourable employment prospects.
Stress caused by interest rate rises have lifted by over 11%, and costs of living by over 3.4%, whereas fear of unemployment fell 6% and redundancy fell 1%.
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