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A free Victorian service that helps home owners facing mortgage stress has been forced to temporarily close its books, as interest rate rises and inflation bite.
Most mortgage holders are hoping the RBA will pause interest rate rises when they meet next week. A free Victorian service that helps home owners facing mortgage stress has been forced to temporarily close its books as the number of calls for assistance doubles.
Mortgage Stress chief executive Nadia Harrison says severe financial stress was also reaching new parts of the community in a trend she expects to continue after interest rates rose to a 15-year high on Tuesday.interest rate rises"This is the greatest demand we've ever seen — we've seen a doubling of people reaching out for assistance between January and August this financial year," Ms Harrison said. She said the organisation's latest data showed that more than half of Mortgage Stress Victoria's clients were employed, rather than being welfare recipients, with some seeking financial assistance for the first time.
"We service a cohort of clients who are at risk of homelessness, so to have a majority of clients that are employed, it shows that the problem is really extensive throughout the population," Ms Harrison said. With demand for its services expected to keep building in coming months, Ms Harrison said the service had paused new intakes for all but those who needed the most urgent help.
Calls to the National Debt Helpline have also increased, with 4,153 people contacting the helpline in August, compared to 2,990 at the same time last year. Meanwhile, a data analytics firm says several Melbourne growth corridors are among those already suffering the most widespread mortgage stress across the country.
Digital Finance Analytics defines mortgage stress in cashflow terms — when a household had more outgoings than income — and bases its findings on phone surveys which are then extrapolated using census data. Its analysis for the end of August listed Narre Warren, Cranbourne, Roxburgh Park, Pakenham and Ballarat as the five postcodes with the highest number of affected households in Victoria. Horsham pensioners Annie and Andrew Nikkelson told the ABC that paying the mortgage was increasingly tough.
"We've sort of got to prioritise — each fortnight we've got to work out what gets paid and what doesn't get paid," Ms Nikkelson said. Andrew and Annie Nikkelson say they are living day to day, and may consider selling their house if interest rates go up again.
"If we can afford to get food, we get food. If we can't afford it, well we just scrounge what we've got in the freezer left over until we've got money where we can get more food," Mr Nikkelson said.
"We'd definitely have to sit back and think whether we keep the house or get rid of it," Mr Nikkelson said. Horsham resident April Shortis said the latest interest rate increase said her family was tightening the belt after the latest rate rise.
"You have to decide what you're going to pay for — you know, do we get new shoes for the kids now or do we put it off for a few weeks? " she said. Ms Shortis said council rates had also increased.
"Everything's more expensive and having the mortgage go up is just another blow to everyday Australians," she said. If interest rates were to rise again in November, Ms Shortis said it would be "a very sad Christmas".the odds of the Reserve Bank lifting interest rates in November have fallen sharply, perhaps providing a small bit of relief for home owners.
Annual headline inflation jumped to 4 per cent in August, up from 3.5 per cent in July, according to the Bureau of Statistics . It was slightly lower than the 4.1 per cent inflation that economists were predicting ahead of the official numbers being released. In South Yarra, in inner Melbourne, Steve Whittington is also struggling to pay the mortgage on a home he has owned for 25 years.
Having lost his job in April, Mr Whittington said successive interest rate rises had also made it incredibly difficult to pay his mortgage.
"Sometimes I Airbnb the whole house, like at the moment," said the father of two, who often goes camping with his children during school holidays or stays at a friend's place. "Other times, when I don't have my children … I just Airbnb my bedroom, because it's got an ensuite, and then I just sleep in my daughter's bedroom. But that's only $100 a night or whatever, so that's not a solution.
" CPA Australia business investment lead Gavan Ord said inflation in Australia remained "stubbornly persistent". "Until inflationary pressures ease, households and businesses should expect interest rates to remain high, and possibly go higher," he said.
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