By Dave Fleming : 15 December, 2017

Hot Off The Press, Courtesy
Of Channel 9 News

Almost one million Aussie households are
staring down a mortgage ‘time bomb’

mortgage debt spelled out on scrabble tokensAlmost one million middle-income Australian households are facing a mortgage time bomb as soaring living costs plunge families into repayment stress.

A new analysis by Digital Finance Analytics (DFA) has shown that the number of households currently in mortgage distress has risen by 20 percent in the last six months to 910,000.

At the current rate, more than one million households will be struggling to make repayments on their home loan in 2018.

Primary factors ratcheting up the stress faced by families include stagnant wage growth, living pay cheque to pay cheque and the looming threat of a rise in interest rates.

Martin North, Principal of Digital Finance Analytics, says that the risks of more middle-income families borrowing enormous loans from the banks are rising.

“Risks in the system continue to rise, and while recent strengthening of lending standards will help protect new borrowers, there are many households currently holding loans which would nothand calculator with Mortgage showing in the calculation screen now be approved,” said North.

“The number of households impacted are economically significant, especially as household debt continues to climb to new record levels. Mortgage lending is still growing at three times income.
“This is not sustainable.”

Broken down by region, NSW had the most households in stress with 238.703, followed by Victoria with 250,259, Queensland with 162,726 and WA with 121,393.

Households are defined as being “stressed” when their net income does not cover ongoing costs, including repayments on their home loans.

Households that have a tight budget but manage to make ends meet are defined as being “mildly stressed”, and those who are unable to make a mortgage repayment within the next 30 days are defined as being “severely stressed”.

word cloud with debt as the central wordNine Network’s Finance Editor Ross Greenwood said that it’s “pretty obvious” why families are struggling.
“Families are struggling with rising costs. Rising health insurance premiums, rising electricity bills and on top of that, many families have taken on very big mortgages,” said Greenwood.

“Now if their wages aren’t growing fast then quite clearly they are going to struggle.

“Another worrying statistic is that there are now 52,000 households that this organisation has identified that are now 30 days behind on their mortgage repayments, that means technically banks could walk in and close them up.”

Independent Analysis

I have been in the mortgage brokering industry now for approximately twenty years and I have now seen a whole generation of Australians take out mortgages who have no experience of what a 7-8% interest rate mortgage is. Many of these borrowers insisted on borrowing to their maximum capacity. Although in the last six months banks have been tightening up on what any new borrowers can get loan amount wise, there is still many years of previous borrowers who pretty much were able to borrow almost anything they wanted.

Recently we have seen not only banks but many other commercial enterprises prey on the Australian consumer with increased prices (energy companies being one of the notable ones). Although many borrowers have budgeted diligently there would be very few of them that would have factored in some of the essential services price rises we are seeing.

The Solution

For many there may not be a solution, however our advice is to drill down on your budget and find every last cent you can find and start paying it onto your mortgage. I would recommend you beg, borrow, and tighten your budget belt to find whatever you can to pay toward your home mortgage in order to escape the mortgage stress that may be headed your way in the not too distant future.

Also, get with your home mortgage broker, because if you have a 4 in front of your home mortgage you are probably paying too much.

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By Dave Fleming : 15 December, 2017

Discover The Five Things a Mortgage Broker Will Do That Your Banker Won’t.

Mortgage Brokers can be Addictive
An understanding of exactly what home loan brokers do can still be an obstacle for some individuals in Australia. A 2015 report at a home loan conference for Australian home mortgage professionals specified that just 40 % of Australians have a mutual understanding of exactly what home loan brokers do. That’s up 7 % from 2012, yet highlights that the broker market is a fairly new one in Australia.

Brokers have prevailed in the United States since the 1980s. This suggests that lots of Australians are still unfamiliar with the distinctions in between using a lender to secure a home loan versus working with a mortgage broker to seek out their ideal mortgage.
Stats likewise gathered by the Report are showing that when an Australian has acquired a home making use of a broker, there’s no reversing back to the old method of doing things. This might simply be because of these five services a broker supplies that simply don’t come as basic services from any bank, American or Australian.

1. Provide you with a more comprehensive range of objective and complimentary advice.
It doesn’t matter how well trained a banker is. Banks just have so many items to offer. The guidance you can anticipate from a mortgage lender will be limited to the items the bank offers.

A mortgage broker, on the other hand, has a much more comprehensive array of loan providers to offer home mortgages from. This indicates that the broker must be well-informed on every possible variation of mortgage product he or she offers. This suggests the suggestions you receive are more likely to be more balanced.

2. Offer you education, so you know what different home mortgage choices cost you.
This is another aspect of being objective. Your home loan broker’s task is to help you comprehend the various home mortgage items that are offered for your credit and earnings circumstance. Your broker can assist you to establish an action strategy so that even if you do not qualify for a much better home mortgage now, you’ll have the ability to get a better rate after carrying out your initial plan.
Some credit unions can offer education though they won’t hesitate to inform you that a credit union is not a bank. Your broker is always there for individual education time.

3. Automatically search for the lowest rate of interest possible based upon your credit history and your earnings.
Since a broker has so many more loan providers to deal with, it’s a lot more likely you’ll find a lower interest rate and a home mortgage plan that conserves your cash through a broker. A broker earns their money by matching you to the mortgages that the bank doesn’t provide instantly.

Your banker may agree to lower the rates if you start haggling with them, yet there’s no guarantee there will not be other not so obvious costs that erase those lower rates. A broker looks at all the loan expenses, and because the broker is education focused, your broker will assist you in identifying all the charges that are concealed in the documents.

4. Work out the best home loan item possible based on your credit rating.
Negotiating with the bank isn’t easy. It takes some time and energy. When you meet directly with the bank, you’ll be your very own mediator.

You are turning to an expert negotiator when you work with a professional mortgage broker. You are working with somebody who understands the best ways to discover the very best rates and the best ways to work out the best deals for your advantage. It’s even possible your broker may find the very best offer from your very own bank– one the bank didn’t provide to you.

5. Provide an evaluation for your mortgage a couple of times a year to see if there’s another way to assist you to pay your home mortgage off even quicker.
The bank isn’t motivated to help you lower your financial obligation, despite the fact that it has now become the pattern for Australian banks to provide a much more comprehensive set of options than were readily available even six months ago. The bank anticipates you will do your research before your mortgage term ends.

Up until now Australian banks are not required to notify customers, in the same way, Australian charge card businesses are now required to inform their customers of the effect of making the minimum payment means to their long-term financial interest. Australian banks are going to make their cash by letting customers continue restoring their interest only and fixed rate terms without notifying them of making the appropriate changes.

Your home loan broker does not have anything to lose by assisting you to get out of debt. So when it comes time to restore your mortgage term, your home loan broker is on your side, searching for the very best choices.

Summary.
Only a few years ago, the services a home loan broker now offers in Australia were just something readily available in the United States. Now that the practice has come across the Pacific Ocean, it deserves at least discussing your home mortgage requirements with a broker, if only for the five services a home loan broker offers as standard practice. Even if some banks provide some of these services, you’ll find they aren’t constant practice in the banking industry.

Bio:
About About Dave Fleming

Dave is enthusiastic and fascinated by the digital and social media worlds. He is passionate and enjoys entrepreneurial pursuits, wealth creation financial strategies, health, fitness as well as cooking. Dave is the webmaster at www.mastermortgagebrokersydney.com.au, which is an information website pertaining to loans. He has a deep commitment towards writing about and helping people understand the basics of how the financial world works.

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