Current at: 07 November 2007
Today’s increase in official interest rates will see more than 650,000 Australian households caught in the grips of mortgage stress.
More than 8 out of 10 households in mortgage stress have a household income of less than $75,000 a year, dispelling the myth that the incidence of mortgage stress has been distorted by high-income households taking out big mortgages.
HIA is calling on both of the major political parties to commit to a national program that would extend financial counselling and budgeting advice to the worst-affected families.
HIA’s Mortgage Assistance Plan (MAP) would involve the new government expanding the current Financial Literacy Program to ensure those suffering deep mortgage stress could receive practical financial advice.
The program should also extend to first home buyers with low equity to ensure that new buyers are aware of the risks of over-extending themselves.
Funding of $30 million over the forward estimates HIA believes would provide more than 100,000 households with financial advice necessary to manage household budgets.
The Commonwealth should seek the support of banks, state agencies and financial advisers to make available financial counsellors to assist those families in aggravated financial distress.
The effect of four rate increases in the past year on already-stretched household budgets has been devastating for many families and the MAP would provide valuable financial advice and assistance to families who are caught in a mortgage debt trap.
