Australian’s fear the worst

Research into the Australian public’s expectations for tomorrow’s predicted interest rate rise has found 96 per cent of those surveyed believe it will result in greater mortgage stress and property loss.

A survey of 450 people conducted by Virgin Money found that ‘baby boomers’ would be the most affected by a rise, with 98 per cent of respondents aged 40-59 saying they were deeply concerned about mortgage stress and the risk of property loss.

Virgin Money chief executive officer David Wakeley believes this is because “‘boomers’ were taught to buy into the Australian dream and put their money into property”.

“It’s in no one’s best interest to see a rise in the rate of mortgage foreclosures. Financial institutions not only need to be extremely responsible in their lending practices but also innovative in terms of the flexibility of their product, [and] educate their customers and provide solutions for them to meet their repayment liabilities in times of hardship,” he said.

The survey also found 38.3 per cent of ‘generations X and Y’ members claimed to have already suffered from mortgage stress, while 61.5 per cent of 40-49 year olds said they had been victims of mortgage stress personally.

“Conversely, in 2001 the Australian Census reported that more than one in 10 Australian homebuyers experienced ‘mortgage stress’, where cash rate were in the low 4 per cents (i.e, between 4.25 and 4.5 per cent),” Wakeley said.

On a side note, the survey found women were more concerned about mortgage stress than men, with 97 per cent of females saying an interest rate rise would hurt them compared to 95 per cent of their male counterparts.