Monday, July 22, 2024
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One in eight mortgage holders miss payments: survey

by xyonent
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The Finder survey of 1,071 respondents, of which 342 were mortgage holders, revealed that 12% had missed at least one payment in the past six months.

An estimated 396,000 borrowers fell behind on their mortgage repayments during the period, according to Finder, indicating that 4% of mortgage holders (132,000 households) missed at least one repayment.

Additionally, 8 percent of mortgage holders said they had defaulted on multiple payments, while 3 percent said they had requested a payment holiday or applied for hardship assistance from their bank or lender.

These findings come after a YouGov survey by the Australian Securities and Investments Commission (ASIC) revealed that 47% of Australian adults (equivalent to 5.8 million people) who had debt in the past year were struggling to repay it, with rising living costs, reduced income and unexpected expenses being the main reasons.

The survey also revealed that just under a third (32%) of borrowers are worried that mortgage stress will cause them to miss repayments, with more than one million mortgage holders at risk of falling into arrears.

A third (33%) of those who missed a payment said they had run out of funds because of other payments, while 31% said rising interest rates had made it impossible for them to pay their mortgage.

Finder mortgage expert Richard Whitten said mortgage defaults were becoming a “growing concern”.

“Thousands of mortgage holders have weathered rising interest rates but are now experiencing extreme financial strain as their savings and emergency funds are depleted,” Whitten said.

“Further rate hikes will push many people to breaking point.”

He added that mortgage holders are spending a “disproportionate amount” of their income on mortgage repayments.

Indeed, our latest Home Affordability Report, published in partnership with ANZ and CoreLogic earlier this year, revealed that the ratio of median income to median house price needed to repay a new mortgage has increased to 48.9% nationally (as of the March 2024 quarter) as house prices have continued to hit record highs over the past six months.

“Interest rates have risen so rapidly that they’ve pushed mortgage borrowers to their limits, with some unable to financially support themselves,” Whitten said.

Whitten urged homeowners to review their mortgage options and negotiate better terms with lenders.

“Refinancing, switching to interest-only payments and extending payment terms are all options for stressed borrowers,” he said.

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