A new survey has found that the number of Australians who spend half their income repaying debt has doubled in the past 12 months as a result of soaring interest rates.
A new survey has found that the number of Australians who spend half their income repaying debt has doubled in the past 12 months as a result of soaring interest rates.
The survey, by Retail Financial Intelligence for mortgage insurer Genworth Financial, found 25% of people use more than half their income to service mortgage repayments, compared with just 12% last year.
The proportion of people anticipating facing difficulties in repaying their mortgage rose from 18% in 2007 to 27%.
Yet Peter Hall, Genworth’s Australian executive, says defaults through mortgage stress remain relatively low. “Despite these concerns highlighted through the survey, analysis of our portfolio shows that it still takes a defined event, such as a loss of income or illness, for a borrower to default on their mortgage.
“However when borrowers are already stretched to capacity, the defined event only has to be small to have serious implications.”
Mortgagees might be feeling the heat, but anybody with a self-managed superannuation fund will probably have a smile on their face.
New data from the Australian Taxation Office shows DIY funds outperformed the sharemarket in the first three months of 2008. Assets held by DIY funds fell 4.5% to $286.1 million between December 2007 and March this year. During this period, the Australian sharemarket sunk 15.5%.
DIY funds generally held more assets in cash and managed funds, which insulated them from the turmoil on global equity markets.
Read more on mortgage stress and DIY super
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