 Help for mortgage stress
There is a lot that Australian families can do to protect themselves from mortgage stress, or worse, repossession. Banking and finance ombudsman Philip Field says banks are being helpful when customers come to them.
Field says some, such as ANZ, have established a hardship unit in the past 18 months, while Commonwealth Bank recently announced up to a year's mortgage repayment holiday for those who lose their jobs. Most banks offer similar relief and say anyone getting into trouble should call them as soon as possible to discuss repayment breaks or loan restructuring.
Carolyn Bond from the Victorian Consumer Action Law Centre says that consumers who are experiencing mortgage stress must weigh up their options and talk to their bank before the situation worsens any further, and warns that refinancing is not always the most sensible option going forward. Borrowers have the right to request a hardship variation says the co-chief executive.
"We are constantly seeing people who refinance because they have got into trouble," she says. "They refinance and get the arrears thrown in. The new interest rate might be higher because it's a higher risk. They could end up in a worse situation than when they started out."
With unemployment set to rise to 9 per cent by next year, the risk of loosing your house is a reality for many Australians. Unemployment figures have been rising steadily and with this comes the very real risk of mortgage stress, with people not able to keep up with the repayments.
Lower rates are helping many home owners to manage their mortgages much easier than a few months ago, but there are still countless others who are struggling with mortgage repayments.
Mortgage stress is generally defined as those who spend at least a third of their income on mortgage repayments. Recently the number of people in mortgage stress has risen.
Home loan rates have been falling in recent months but while mortgage interest rates were at their highest during last year many households started to struggle. The warnings are out there about acting fast to prevent falling into financial hardship later on.
First home buyers are thought to be the hardest hit especially those who borrowed above their limit or did not put down a deposit.
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