Analyst warns up to 1 million homeowners on the edge of mortgage default by September
<p>An independent analyst has warned that almost one million Aussie homeowners are “on the edge” of mortgage default in the next two months.</p>
<p>Digital Finance Analytics principal Martin North explained that if the big four banks go ahead and increase their standard variable rates by as little as 0.15 percentage points over the next few months, homeowners could default.</p>
<p>The <a href="http://www.abc.net.au/news/2018-07-11/up-to-1-million-households-may-go-into-mortgage-default-by-sept/9976268" target="_blank"><em><strong><span style="text-decoration: underline;">ABC</span></strong></em></a> reported that a number of Australian banks – such as Macquarie Bank, AMP, Bank of Queensland, Suncorp and ME Bank – have already started raising their interest rates on their ‘occupier loan’ products.</p>
<p>Mr North told <em>ABC News</em> rate rises were almost a certainty, while Aussie Home Loans chief executive James Symond fears the repercussions of this will be locking out potential borrowers from obtaining a mortgage.</p>
<p>“I'm almost certain they'll be forced to lift those rates, it's a question of timing, and of course the political reaction when it happens,” Mr North said</p>
<p>Now, experts are looking to ANZ, Westpac, CBA and the NAB to make their next move.</p>
<p>Mr North believes the rate rises will be in place by September, unless there is an unforeseen change in the global financial market that changes the course.</p>
<p>“Today 975,000 households across Australia with owner-occupier mortgages are right on the edge, and there are around 50,000 who are already over the edge and are looking like they could default,” he said</p>
<p>The ABC spoke to Commonwealth Bank chief economist Michael Blythe on some of the contributing factors to the predicted interest rise.</p>
<p>“Well look all banks are facing the same issue, part of that funding pool that they draw on, be it domestically or overseas, we have seen some upwards pressures on interest rates in those areas,” he said. </p>
<p>Mr North said borrowers would be given very little wiggle room with even just a very small interest rate change.</p>
<p>With just an interest rate rise of 0.10 per cent, a homeowner in Sydney with a $750,000 mortgage would be required to pay an extra $60 a month.</p>
<p>Aussie Home Loans chief executive James Symond told <a href="https://www.smh.com.au/business/banking-and-finance/aussie-chief-warns-buyers-en-masse-won-t-be-able-to-afford-a-home-20180710-p4zqm5.html" target="_blank"><em><strong><span style="text-decoration: underline;">The Sydney Morning Herald</span></strong></em></a> that a number of people would be “locked out” of the property market if banks continue to tighten credit access.</p>
<p>“I’m hoping everyone is looking at it very, very carefully, because I’m seeing a credit marketplace tightening a lot, a real lot. And if we saw it tighten any more, I think that you mightn’t get the desired outcomes you want,” he said. </p>
<p>“You might get, en masse, a whole bunch of people that just simply can no longer afford a home, full stop. The big banks are concerned.”</p>
