Australian home owners are spending more of their income on mortgage repayments, and the pain is only set to worsen. Experts say some could be forced to sell.
abc.net.au/news/housing-apra-rba-forced-sales/101772904As COVID hit and the Reserve Bank cut interest rates to record lows to stimulate the economy, Aaron Doull and his wife Saori took out an $850,000 loan to buy their first home.But next year, when the couple come off that fixed loan, they'll face variable interest rates of around 6 per cent. That's well above the 2.5 per cent serviceability buffer that their loan was based on.
Mr Doull reckons they have about six months worth of savings to get them through interest rates of around 6-7 per cent."We could be back having to rent and going through the rental system all over again, which isn't really an enjoyable place to be." Experts estimate almost 300,000 borrowers who took out home loans in the two years to May are at serious risk of default or forced sales.
"It's very bad, especially in the emerging communities, because of lack of financial literacy," Mr Weldemariam says."They come and knock on our office, and they say, 'What is my future? Is my bank going to take the property?'"Mr Weldemariam's clients were too worried about their financial situation to go on the record.
"We talk about their budget, about disposable income, about their repayments, and if it's getting tighter, we advise them to sell it."
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