MORTGAGE DEBT CRISIS

McIvor Times - - FRONT PAGE - By THOMAS HINSS

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.

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