Hard to believe

First home buyers have always been the group most sensitive to mortgage stress through interest rate rises and job loss/reduced income.

Nothing has really changed there, even though the amount borrowed is higher (more CC debt than before too), IR were much higher years ago.

I'm not sure what the article is trying to 'say'.

They probably got hold of some statistics and had not covered the subject of FHB for a while, and thought it would make a good story??

It certainly caught your attention :).
 
Must be a slow news week....... much ado about nothing. Same old, same old.

A percentage of FHB are always in mortgage stress. Some are there from day one! A chart tracking the nominal versus adjusted %'s would have been far better, but then they would have bugger all words to print...... :cool:
 
Not surprising since most FHBs have no/little deposit, rely on their incomes for servicing, borrow 95% of property's value and usually purchase new properties whose valuations probably won't stack up in the current climate.
 
Interesting that the fhb'ers don't know what their Incomes and outgoings are. How do they know they're in mortgage stress then?
 
locko24 said:
Interesting that the fhb'ers don't know what their Incomes and outgoings are. How do they know they're in mortgage stress then?
Click to expand...

They don't, which is why these 'results' are misleading. The people surveyed 'felt' they are stressed, but that doesn't mean they don't have lots of fat to cut out of their budgets.
 
alexlee said:
They don't, which is why these 'results' are misleading. The people surveyed 'felt' they are stressed, but that doesn't mean they don't have lots of fat to cut out of their budgets.
Click to expand...

Well said. I had someone the other day tell me how unfair it was that paying their mortgage was their biggest expense. I asked them what they thought SHOULD be their biggest expense, and they refused to answer.
 
People forget all too often that a PPOR mortgage is a privledge, and a huge commitment because of the nautre of the transaction (ie. non-deductable). On the flip side, FHB generally arent as schooled up on the potentials of their PPOR in regards to equity, leverage and the like to invest as the seasoned investor, until they take it upon themselves to learn! Once this is learned, they begin to harness the knowlege regarding debt, and learn how to live with it as every day part of life.

pinkboy
 
Just looked up the definition of - Mortgage Stress:

Based on the Australian Parliamentary Library definition of “mortgage stress”, it refers to a situation where homebuyers are paying more than 35 per cent of their income on home loan repayments

Going by that definition, mortgage stress doesn't sound too extreme at all.
There would be plenty of non-first home buyers in "mortgage stess" to, doesn't mean they are having financial difficulties.
 
alexlee said:
They don't, which is why these 'results' are misleading. The people surveyed 'felt' they are stressed, but that doesn't mean they don't have lots of fat to cut out of their budgets.
Click to expand...

"Those in Tasmania are leading the crisis with 17.2 per cent falling behind in repayments"

This is factual, not how they feel.
 
mattnz said:
"Those in Tasmania are leading the crisis with 17.2 per cent falling behind in repayments"

This is factual, not how they feel.
Click to expand...

Does not surprise me. Unemployment seems high in taz and lots of vacant shop fronts. I have been down here with work for the last 6 months. Things are very slow down here....
 
When 1 in 6 first home owners nationally can't afford their repayments, despite historically low interest rates, it is a definite sign that housing is massively overvalued and set to fall.

Just imagine the coming scenario... QE infinity pumping billions every month to create inflation... eventually RBA has to raise rates to control it. It will be scary to see how high that figure will get if rates jump by 3% or more. Could easily be 1 in 2 or even more that can't afford their repayments then, especially when unemployment starts to rise again.

It also shows that banks overestimate what their customers can afford to borrow and repay.
 
mattnz said:
It also shows that banks overestimate what their customers can afford to borrow and repay.
Click to expand...
I don't know that this has ever been the case.

What has always been the case though is that there is always a percentage of people who fudge their figures to get a loan that they really can't afford.
 
Don't forget there are those that have borrowed to the max, BUT then get store finance approval, CC's, expensive phone plans, car loans, etc.

These are the people who are one pay from disaster. If it was just the mortgage I'm sure many would be fine - perhaps even be able to save a buffer.

You can blame the banks only so much.

When your LVR is high and you have EXTRA debt, no savings, possibly an unsecure job (or relationship), one that relies on overtime or you work in a 'slowing' industry, it wouldn't take much to default.

That percentage sounds about right to me. It's a big purchase and responsibility, and some people go into home ownership without realising that.
 
alexlee said:
They don't, which is why these 'results' are misleading. The people surveyed 'felt' they are stressed, but that doesn't mean they don't have lots of fat to cut out of their budgets.
Click to expand...
Agreed.

And; the word "stressed" is such an over-used and pretty much irrelevant word anyway.

What I mean is; every single person on earth has stress every day of their lives to some degree.

Any soldier on patrol in Afghanistan or wherever,
A beat cop on every single shift of his career,
Ditto any Mica paramedic - double it if you are based at King's Cross.
A high school kid studying for an exam in a subject they are weak in,
Job deadlines for work to be completed,
Traffic snarls when you are late for work,
Sick kids/relatives,
A drug addict who needs to get the next fix,
Car breakdown,....the list is endless.

To me; the use of the word "stress" seems to be used mostly by "victims", and those who want a paid holiday from work thanks to the Gubbmint..

From my experience, the doers just keep on going.
 
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