Mortgage stress to blow out in 2009

While interest rate cuts have helped ease mortgage stress, close to one million households could experience it by mid 2009 as rising unemployment takes its toll.

According to Fujitsu Consulting’s latest Mortgage Stress-O-Meter, released yesterday, it revealed that mortgage stress levels had fallen by 23% over the past four months to 680,000 compared to 882,000 in August 2008.

However, Fujitsu forecasts that 960,000 households could suffer mortgage stress by June 2009, as unemployment rises and fails to offset the RBA’s rate cuts.

The report predicts that Young families will continue to be the largest sufferers of mortgage stress, followed by “disadvantaged fringe” households – low income households in peripheral urban or rural locations. The “battling urban” demographic – limited income households in high density urban areas – will also struggle.

Earlier this week the Housing Industry Association (HIA) said households suffering mortgage stress had fallen to 584,354, according to its calculating methods. However, it also warned that “weaker employment prospects could undo this good news”.