Melbourne, Victoria (CU)_Hundreds of thousands of people across Australia are said to be in a mortgage crisis, with more than 230,000 households at risk of losing their homes.
According to data released by leading consumer advocacy group, CHOICE, over 130,000 households from Victoria and New South Wales alone are on the edge, while people from urban and regional parts of Queensland and Western Australia are also facing the mortgage stress.
Choice Chief Executive Alan Kirkland noted that these people are those who spend more than they earn and hence live fortnight to fortnight at times. “That means that they have to make difficult choices, like whether to put food on the table or keep up with repayments,” he said. “If they can’t maintain the juggling act, they risk losing their homes.”
However, some experts claim that with interest rates having remained unchanged since November, it is difficult to see how there can be a “significant increase” in mortgage stress. Although there was an increase in job losses and reduction in working hours on account of the pandemic last year, however, these issues were particularly covered by various mortgage deferrals.
Meanwhile, the federal government is looking to wind back safe lending laws which were put in place to ensure banks avoid giving loans to people who cannot afford to repay, thereby avoiding the huge damage that is being caused to families and communities by mortgage stress.
Experts are of the view that there is no need for the relaxation of these laws since there is no evidence to suggest that people are finding it difficult to obtain mortgage loans simply because banks are unwilling to lend. These experts worry that the government is in fact going too far in encouraging people to take mortgage loans with insufficient equity stake, particularly by encouraging single parents to take out mortgages with 2 per cent deposits and permitting another 10,000 people to do the same with 5 per cent deposit.
