Mortgage stress may rise

by InsideFinance 14/08/2009

 Housing affordability

 Fears for mortgages repayments are growing as unemployment rises.  Fujitsu Consulting are concerned the number of people struggling to repay their mortgage could rise by June 2010 by almost double the current numbers.

Fujitsu Consulting managing director Martin North suggests rising unemployment and reduced pay or hours would play a part.


"While we have reduced our unemployment forecast to peak at 7.5 per cent, we think interest rates will rise soon and more sharply than people expect as the threats from the global financial crisis abate," Mr North said.

"Interest rates could rise 1-2 per cent in the next 18 months."

 

In August last year we saw the worst when 900,000 families were feeling mortgage stress.

However, falling interest rates and the boost to the first home owners grant boosted the economy and helped thousands of home owners.

Households with 30 per cent or more of their income used to pay the mortgage are considered to be in mortgage stress.


The typical monthly repayment rose up 7.6 per cent. HIA chief economist Harley Dale is aware of the pressure for new housing and this is putting pressure on house prices.



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source: The Australian
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