It has been noted by some market analysts that the current climate of rising mortgage stress could be creating a ‘perfect storm’ for many households to be at risk of defaulting in the next 12 months.
It has been revealed that across the nation more than 767,000 households are now in mortgage stress with 32,000 of those in severe stress. Overall this equates to 23.4% of households, up from 21.8 per month from the prior month. - Digital Finance Analytics, April 2017
Industry experts have said that these figures are not that surprising considering that incomes are remaining the same or falling, rates are starting to rise and the cost of living is still high while property prices are beginning to ease.
All of these things considered further rises to mortgage rates or the cost of living would be sufficient enough to move them to severe stress.
Experts have noted that over the next 12 to 18 months we may see a rise in severe mortgage stress and defaults.
There are a few things you can start to do now to be proactive:
- Create a realistic budget and try to stick to it - it will help you identify where unnecessary spending is going
- If you have a credit card, personal loan or lease - pay more than the minimum repayment. Every extra dollar helps!
- Potentially refinance your current facility, there may be a way to restructure your lending to get the right deal for your financial position
- Look at fixing all or a portion of your lending while rates are still competitive, this can provide peace of mind while there is uncertainty about if and when the rates will change.