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Rate rises to hurt 50pc of FHB

Staff Reporter 4 minute read

More than 40 per cent of first home buyers are experiencing some sort of mortgage stress, a new report has revealed.

According to the latest Fujitsu Mortgage Stress-O-Meter monthly update, almost 50 per cent of the 255,000 first time buyers who entered the market during the last 18 months are expected to experience some degree of mortgage stress if interest rates continue to head back towards their historical averages.

Fujitsu Australia and New Zealand executive director Martin North said the drivers of stress continue to rotate compared with the bottom of the stress cycle in March 2009.

“Stress caused by interest rate rises have lifted by over 11 per cent, and costs of living by over 3.4 per cent, whereas fear of unemployment fell 6 per cent and redundancy fell 1 per cent,” Mr North said.

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During February, the number of households experiencing some degree of mortgage stress rose by 0.7 per cent to 581,000 – significantly less than the peak of 900,000 recorded in August 2008.

Severely stressed households (those facing a potential sale or foreclosure, or forced refinance) rose by a further 2 per cent driven by interest rate rises, flat income levels and cost of living increases.

That said, mild stress fell slightly thanks to continued improved investment performance in recent weeks supported by more favourable employment prospects.

Rate rises to hurt 50pc of FHB
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