Mortgage Arrears is Growing in Australia


Ratings agency Moody’s says that the rate
of mortgage arrears in Australia, that is, the number of borrowers at least 30 days behind
in their mortgage repayments, has grown over the past few years to 1.58%. That’s despite the RBA cutting the cash
rate to a record low of 1%. Sally Auld, Chief Economist at JP Morgan,
spoke of the reasons behind this increase. She said, “Typically you find that arrears rates rise
when economic conditions weaken. The fact that arrears rates are going up probably
does speak to persistently low income growth. So, overall income growth in the economy is
running at about half of long-run averages. And what that means is mortgage holders, in
general, are using a greater portion of their income to pay back the mortgage.” Les Ladki is one of the more than one million
Australians suffering from mortgage stress. He, along with his wife Samar, bought their
dream house in the northern Sydney suburb of Forestville back in 2001. They paid around half a million dollars for
it, taking out a $250,000 mortgage. But due to a few health setbacks and some
business troubles over the past decade or so, Mr Ladki slowly increased the mortgage
from $250,000 to $609,000. Along with some other debts, Mr Ladki now
owes over $1 million. He lives on the pension now, so has no way
to pay back the debt. His only option is to sell the house. He told the ABC, “It’s probably the biggest mistake of
my life. Never in a million years thought we’d be in
this situation. If we fail to get a contract of sale within
three months, they’ve asked us to voluntarily hand over the house.” Barbara Finlay, a mother from Perth, bought
a house along with her husband back in 2011. She started having troubles paying back her
mortgage after splitting up with her husband. She is now $2,000 behind on her mortgage repayments,
owes almost $10,000 in bills, and is possibly going to lose her house because of it. She’s dipping into her superannuation to
cover the debt, and receiving food hampers from her local church to help feed her family. She told the ABC, “I didn’t want to move out because rental
prices are higher than what my mortgage was. I didn’t really want to upset my children,
so I continued to stay on and pay all the bills on my own. I’ve got rates that are three, nearly four
years behind. Water bills, everything, phone bills — they’re
all out of control. You don’t sleep a lot. You are constantly worrying that you are going
to be one of those families who is living in their cars.” JP Morgan’s Sally Auld spoke of the future
of the Australian economy and the weak housing market. She said, “It’s not our view that over the next 6
to 12 months the labour market is going to get a lot better. It’s not really our view that income growth
is going to pick up a whole lot. I think what that tells you is this trend
increase in arrears rates, is probably likely to continue over the next 6 to 12 months. If you are in difficulty with your mortgage,
it’s very easy to exit that in a stronger housing market, because prices are going up. There is demand for property and it’s easy
to sell and get rid of the debt. In a softer housing market that’s a lot more
difficult to do, because you might have to take a hit on the price that you receive. So that means we’re probably in a world where
mortgages stay in arrears longer than would otherwise be the case.” So that’s the state of mortgage arrears
in Australia. Mortgage stress is up. Property prices are down. And despite record low interest rates, the
rate of Australians that are set to lose their home due to increasing debts, is growing.

Paul Whisler

24 Comments

  1. You make fantastic videos brother! Keep up the good work 🙂

    Josiah.

  2. It's not even taking a hit to originally invested equity in most cases, selling is taking a hit to expected profits. For people who bought their property 2016 or earlier and are in arrears, you're going to sell the property for at least what you paid for it. All things considered, you should be happy with that. Don't be fucking greedy.

  3. My XYF has $1 500 000 debts and net worth $200K. She is borrowing 80% LVR at lo doc predatory lender … btw her taxable income is ~$35 000. What could go wrong???? Oh, in the last few years she took the kids to Europe for month, updated her BMW x4lease and put in a $60 000 pool. Ignoring her $134 000 company liquidation debt. Lovely person. Any multi millionaire white knights out there????

  4. The Bankers need to get the pineapple not the people, they are responsible for this mess.

  5. Me and my wife are completely debt free and have 45k in savings. We both work part-time and we can save 30k per year. I have no sympathy for blue pill people. The amount of times I've had to listen to their blue pill bullshit and dumbass laughter in the workplace when I've told them they should live below their means. They deserve to suffer like this.

  6. Im fat so im blaming fast food and sugar not myself and my lack of self control.

  7. Yeah the hole show is going belly up.you're being told .don't come to me wanting a cup of rice.prepare store and save. It's over .

  8. Keep an eye out for Pillar 3 report in the coming weeks. Last qtr (March 19) the ANZ reported a 14% increase in the total $ value of Residential Mortgage loans >90 days past due from prior year (March 18). Write downs doubled and impaired loans total $ value increase 23%.

  9. Great video, have to say that I have been out of the workforce for 6 yrs paying a mortgage with no savings but getting by. Last year came out of a fix rate and my bank sent me a letter with offers. We came to an agreement but 5 days later said I had to talk to their hardship people. No c/cards, no personal/car loans and no default notices from the same bank. Oh, it's because of the Royal Commission. On the phone to Fed. member and 2 days later the original deal done. Bullying tactics, pie in their face : )

  10. I had problems in 2012, I sold my house and I sold my car, I went to rent, and I will never get a car, I am saving money, and when I get the deposit y would buy a flat and would never, never will buy a boody car

    I seen many people who are homeles got a car, a car is a wasting money machine, if I had´nt had a car, probably I will stay living in may house from 2012

    People never realize, How expensive is to have a car

  11. only people getting pay rises are government workers. im a tradie and my job is in high demand yet wages havent moved in 10 years.

  12. This is all necessary and a good thing, the cleansing fire must get rid of the weeds so the forest can grow. There will be some pain, some people will whine because their investments don't earn as much but no one will starve and people will make do with what they have.

  13. Hope you all know about the cash limits the gov is trying to sneak thru. I highly suggest you all watch recent video at IN THE INTERESTS OF THE PEOPLE to see what Scomo is trying to do with your funds !!!!

  14. My mum ,always used to talk about how mutch she was going to split the inheritance ,after all her house was worth sooo ,much , lived all her life on a shoe string , then arrived a new car , quality of living improved , O! & she took the grand kids to Europe , said she’s living off the interest of her invested bank money , now the real-estate is dropping she’s gone very quiet , guess what she has done ?
    Thank god she hasent long to go now ,closer to the end than the beginning ,she says , she will be here long enough to see what happens next though, with a broken heart 💔

  15. It's very said but politicians from banking sectors and corporate investors runied this beautiful country & it's innocent people.

  16. Australia, a casino government trying to hook people into gambling and debt traps.. Soon Australia becomes a mentally country .. as a gambling country .. people gambling from expensive home loans to poker machines .. and all losers.. even smoking to reduce stress but way too expensive .. 😆 so much stress can cause serious illness like cancers.. so good luck to all gamblers.. 😆

  17. Australians don't feel wealthy because they are not. Bad financial decisions and working day jobs have created a situation of enslavement. Being an employee means that one's income is tied to the inflation rate. The inflation rate ALWAYS understates the true costs of living, hence, increases in expenditure tend to be higher than increases in earnings. The end result is that over time either such slaves see increases in debt, or keep having to reduce their standard of living by making increasing sacrifices and "going without". The biggest drain on the typical slave is the mortgage. It just so happens that those who are employed, in contrast to those who are in business, tend to take out the highest mortgages and live in the shittier outer suburbs that are characterised with poor quality housing. Such living conditions means higher transport costs which are an additional burden on the budget.

    I am a business consultant and I help get people into business. If you think you are going to be a winner by working for someone then you are a loser. The business owner's income is tied to the economy, which grows higher than the inflation rate. A relatively competent business owner sees their standard of living increase over time.

    Anyone reading should reflect on their family and friends. Which have the best living standards? The worker or the business owner? The answer is obvious, isn't it.

    If you want to get ahead, talk to me. Don't complain, don't whine, just contact myself or another person who can help to get you into business.

Leave a Reply

Your email address will not be published. Required fields are marked *