My accountancy firm (Cutcher and Neale) each day email me a general financial news update. A portion of yesterday’s email is below. It is published with Cutcher and Neal’s permission.
The information very much supports my decision to reintroduce our ‘No Gap Pregnancy Care’ program.
“CNIS Perspective
Mortgage arrears for Australian homeowners have reached a three-year high, with elevated interest rates flowing through to the cost of debt and household living expenses.
Data released last week for the March quarter showed a further tick higher in arrears to 1.6%, with the outlook for arrears likely to continue trending higher as savings and offset accounts are being depleting for many households. Especially those with high debt balances that purchased properties between 2019 and mid-2022.
It should be noted, these mortgages were assessed with serviceability at 2.5% to 3.0% higher than the loan product rate at the time it was taken out. With current variable rates exceeding these serviceability measures by ~1%, it doesn’t bode well for those who maximised their borrowing at that point in time, unless their incomes increased to offset the interest increase.
While there was no realisation of the ‘mortgage cliff’ of 2023, some households are certainly dong it tough when it comes to cashflow, with the ‘bank of Mum & Dad’ likely to be stepping in for some of those affected by the sharp rise in debt repayments.
While interest rates aren’t going to come down anytime soon, the likelihood of a major increase in arrears is not foreseeable, unless the economy deteriorates to a point where the unemployment rate balloons.”
