PHOTO: ABC
While many borrowers on fixed-rate loans have already transitioned to much higher variable rates, some have managed to avoid the worst of the mortgage cliff by selling their homes before falling behind on repayments. A booming property market has also enabled them to exit their home loans without incurring losses, keeping mortgage defaults low.
Property News Summary – Saturday 17 August, 2024 | Australia & New Zealand
However, the number of borrowers at least 30 or 90 days behind on their repayments is increasing. The number of properties changing hands within the past three years has surged to its highest level in at least a decade. ANZ reports that three in 1,000 customers are in mortgage hardship.
People often struggle with other bills, like council rates, electricity, gas, water, phone bills, and other debts such as credit cards and personal loans, before missing their mortgage repayments. A survey by comparison website Finder, which included more than 1,000 people, found that about one in five have switched to making ‘interest only’ repayments in the past couple of years to cope with higher interest rates.
S&P Global Ratings has identified parts of Melbourne and Sydney with some of the highest levels of mortgage stress. Andy Barrows, for example, sold his home in the nation’s most expensive city after his mortgage repayments rose substantially. He and his wife had bought in 2020, and just as they both stopped working full-time, the Reserve Bank started raising interest rates in May 2022.