MORTGAGE DEBT CRISIS
MORTGAGES can be a difficult pill to swallow, even more so in the current economic climate and Heathcote residents are feeling the pinch.
One-third of mortgaged houses in Heathcote are suffering from mortgage stress, adding an extra burden on household owners which they simply can’t afford to sustain.
Data released from a recent Four Corners story, which analysed Australia’s growing attraction to the real estate market, showed 33 per cent of the 554 mortgaged homes in the Heathcote region are suffering from stress in the current interest rate climate.
Any further rises in interest rates can only do one thing — drastically increase the already substantial stress these homes take.
Audax Consulting’s Graeme Fleming said the ease of using credit and loans from lending agencies was a major factor in the rising problems of debt for home owners.
‘‘People need to know that lending money to solve financial problems isn’t a solution that will work out well over the long term,’’ Mr Fleming said.
‘‘If you look at any major issue in society, there isn’t a quick fix to them. The process to solve them can take years.’’
Mr Fleming said the affect of mortgage stress wasn’t just confined to households and their owners, but the community at large feels the affects of it too.
‘‘Businesses feel the affects of this as well because people under this stress can’t afford to get the little things like going to the movies, which means these businesses are not having as much money injected into them,’’ Mr Fleming said.
‘‘Although the town does get a lot of business from people passing through it and going to its bakeries for example, it still relies on the trade of the local community.
‘‘Regular customers are the ones that keep them going long-term and having a growing number of people affected by mortgage stress unable to purchase these goods does do damage over time.
‘‘The community is linked in that way economically so it needs to work together in that respect to ensure both sides of it remain intact.’’
With the changes to the economic landscape of the recent years, Mr Fleming said what could be achieved for home owners had changed drastically.
‘‘I think buying a home and paying off a mortgage is not as achievable as it was in the past with the financial pressures we have around us now, especially while we are in this economy,’’ he said.
Mr Fleming said the advice and guidance to making the right financial decisions was out there for people to use.
‘‘There’s plenty of organisations and groups out there who will give people the guidance they need when they are in trouble financially.’’
The onus isn’t entirely on the general population however, as Mr Fleming said the banks have to also play their part to fix this growing debt problem.
‘‘The banks need to be good corporate citizens and repair the image they have these days,’’ he said. ‘‘There isn’t the same trust from the population towards the banks and that doesn’t help solve problems like mortgage stress.’’
Todd Property director Brad Todd said it was a problem the Heathcote region was experiencing alone.
‘‘This isn’t something that is localised to the Heathcote area, it’s a problem in rural areas all across the country,’’ Mr Todd said.
‘‘Combined with the rising cost of living and employment level drops, the ease that people can access credit to dig themselves out of financial trouble is a real problem.’’
Echoing Mr Fleming’s thoughts about finance education, Mr Todd said the more people can be taught and find out about how to do financing correctly the more likely it was that mistakes in this area could be avoided.
‘‘If people can get the right advice and education on how to financially organise themselves then it will go a long way to assist with the problem of mortgage stress.’’
Despite the findings of the mortgage stress epidemic, Conally’s Real Estate’s Jenny Hall said business had been booming over the colder months.
‘‘There’s been a lot of offers on properties and it’s been one of our busiest winters,’’ Mrs Hall said.
‘‘We’ve had a lot of people going for preapproved purchases so they know sooner whether they will get a property or not.’’
Mrs Hall said while the findings on mortgage stress were accurate, the causes were multiplexed.
‘‘I think the data is accurate but how much of it is caused by personal or economic factors is hard to tell,’’ she said.
To find out the data on your town’s mortgage stress levels head to ab.co/2iitPy8, scroll to the bottom of the page and select your town.