People are in mortgage pain, yet interest rates are pushed higher

by Chris Lang on December 9, 2009

High rise building

There I was, reading the latest headlines to see what’s on in the property world – after all this is the busiest season – when I found these interesting articles, definitely worth sharing. This is not just news, but definitely is food for thought.

We’ve heard a lot about foreclosures in the USA, but not so much here, in Australia. Nonetheless, apparently we’re not doing too well on that front – Port Melbourne was identified as an area where people are experiencing a pretty strong mortgage pain. According to ratings agency Fitch, 4% of households are behind on their payments.

Port Melbourne is not the only spot – the mortgage defaults rate in Oak Park, Mornington, Hoppers Crossing, Melton and Boronia is over 2%. Read the full article in The Age here.

Do not assume that people who default on loans are owner occupiers – there are investors as well that can’t keep servicing their mortgages. This article in Sydney Morning Herald puts this in a totally different light – when an investor defaults on a loan, what happens to the tenants? Do they become homeless? The article speaks about Sydney, but I wonder how many people in Melbourne are being forced to look for another home – and the rental market is tight as it is already.

Economists expect the interest rates to go up in 2010, to be more precise they expect a raise of 1% in 2010 and a raise of another 0.75% in 2011. This would mean that on a mortgage of 300K the increase of monthly repayment will be $190 in 2010 and $340 in 2011. As if people didn’t have a hard enough time already, with all the financial crisis, unemployment and unaffordable housing. Read the full article here.

And this last article is on entirely different topic. Did you know that Aussie homes are the biggest in the world? Australian Bureau of Statistics says that the average floor area of a new Aussie home is now 215 square meters.

Ironically, although the houses are becoming bigger, blocks of land are getting smaller. If you think of it, this is exactly the opposite of what you’d want – you have now more of a depreciating asset and less of an appreciating asset. Go figure 🙂 Read the full article in Australian Property Investor magazine here.

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{ 1 comment… read it below or add one }

Sell House Fast December 18, 2009 at 10:55 pm

so not only do the Aussies have beautiful weather, beaches really good standard of living they also have the biggest houses too. No wonder som many people emigrate there

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