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Borrowers turn to government stimulus to pay mortgage

by Annie Kane5 minute read

An increasing number of people are using government stimulus payments to pay their mortgages or rent, according to new data from the Australian Bureau of Statistics.

The findings come in the ABS’s Household Impacts of COVID-19 Survey, which involved a telephone interview of approximately 2,500 adults conducted between 7 and 20 June 2020.

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Building on a similar survey undertaken in May 2020, the June survey aimed to understand behaviours and perceptions around receipt and use of government stimulus payments, as well the level of concern for personal health due to COVID-19 (and actions taken to mitigate the risk of contracting it).

Overall, the June survey showed a slight increase in the numbers of Australians who had received a government stimulus payment in response to the COVID-19 pandemic. The proportion of recipients of these payments rose from 32 per cent in May to 35 per cent in June.

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Moreover, the survey found that a growing proportion of Australians were using their personal government stimulus payments (such as JobKeeper) to pay their bills and mortgages.

While around 14 per cent of all people receiving payments were using it to pay their mortgage/rent, a growing proportion of people said that this was the ‘main’ use of their payment.

Six per cent of all people receiving payments said the ‘main use’ was to pay their mortgage/rent in May, creeping up to just over 7 per cent in June.

Moreover, more than a quarter of employed people (27 per cent) who received a stimulus payment said they put it towards their mortgage or rent, compared to 8 percent of those not working or not in the labour force.

Not only were employed people three times as likely to use it to pay mortgages or rent than those not working or not in the labour force, those who were employed were also found to be paying household bills with their payment (55 per cent compared to 38 per cent).

Overall, the main use of the stimulus payment in June was to pay household bills (32 per cent), which was a change from May when the main use of stimulus payments was to add to savings (29 per cent).

 

The findings around the use of government stimulus and mortgage payments come as many borrowers approach the end of their six-month loan repayment deferral period.

The initial deferral periods, first launched in March 2020, were largely for a period of three months (with the option to extend for an additional three months).

As at 19 June, nearly 800,000 borrowers had deferred their mortgage repayments. 

While lenders have agreed to extend the loan repayment period by another four months on a case-by-case basis (to no later than 31 March 2021), many borrowers have already begun repaying their loans.

[Related: Westpac reports 42% drop in mortgage deferrals]

Borrowers turn to government stimulus to pay mortgage
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Annie Kane

Annie Kane

AUTHOR

Annie Kane is the editor of The Adviser and Mortgage Business.

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