Mort­gage strug­gle warn­ing

NT News - - NEWS -

ONE in three mort­gage cus­tomers have lit­tle or no wig­gle room and have ne­glected to have a buf­fer tucked away in the case of fu­ture rate hikes, the cen­tral bank has warned.

The Re­serve Bank of Aus­tralia’s bian­nual Sta­bil­ity Re­view re­leased yes­ter­day found while some mort­gage cus­tomers are well ahead of their loans, a large chunk of bor­row­ers have no fi­nan­cial back-up plan. The re­view shows onethird of loans have less than one month’s buf­fer.

The RBA said some of those with no buf­fers are on fixe­drate loans that re­strict ex­tra re­pay­ments and some are in­vestor mort­gages where typ­i­cally these types of bor­row­ers have tax in­cen­tives not to pay down debt.

But the over­all dis­crep­ancy in how far ahead peo­ple are on their loans varies sig­nif­i­cantly – many oth­ers are max­imis­ing record-low in­ter­est rates with ag­gre­gate mort­gage buf­fers about 2.5 years ahead of sched­uled re­pay­ments at ex­ist­ing rates.

In the re­port the RBA has warned Aus­tralians who have racked up too much debt, stat­ing while some have taken ad­van­tage of low in­ter­est rates and made ex­cess mort­gage re­pay­ments oth­ers have sim­ply in­creased their bor­row­ings.

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