ALMOST a fifth of first-home buyers are facing the prospect of losing their homes within months, according to an alarming new survey.
The Australian Mortgage Stress Analysis of 26,000 households found the number of young people in severe mortgage stress is set to escalate, with countless families at risk of being driven by lenders to sell their homes.
Almost 16 per cent of the nation’s first-home buyers are in severe mortgage stress. Those in Tasmania are leading the crisis with 17.2 per cent falling behind in repayments, being driven to refinance or pressured by banks to sell. This was closely followed by Northern Territory (17 per cent), New South Wales and South Australia (both 16. 4 per cent), Victoria (16 per cent), ACT (15.2 per cent ), and Western Australia (14.4)
Rising household costs and budget mismanagement are the key precursors landing first-home buyers on struggle street at such alarming rates, according to research firm Digital Finance Analytics (DFA), which conducted the report.
DFA director Martin North said half the first-home buyer households canvassed in the nationwide survey had no proper budget formulated to cope with expenses.
“They don’t know what their incomes are or their outgoings are and they don’t have the money to maintain their lifestyles,” Mr North said.
Credit card use was the highest among first home buyers, the survey found.
“Most people don’t realise that the average loan size is twice as big as it was in 2005 so many people are still mortgaged to the hilt,” DFA director Martin North said.
“The second driver is that overall costs of living are still going up but especially for middle suburban Australians.”
The number of suburban homes in the severe mortgage stress category will rise by 4000 from 43,600 by June 30 next year, the survey shows.
The findings come after Australia’s largest financial comparison website, ratecity.com.au, has seen an increase in high loan-to-value ratio loans which appeal to those with smaller deposits.
The number of home loans offering higher LVRs rose to three per cent of all home loans in the past two months – the highest level since August 2011.
There are also fewer loans requiring buyers to have amassed 20 per cent of the value of the property.
The proportion of 80 per cent loans fell from 8 per cent last month to 6 per cent of all mortgages – the lowest proportion since January.
The figures come as banks are under increasing pressure to find more home loan customers, with bureau of statistics figures showing 35 per cent of all housing loans written in the past 12 months were borrowers refinancing their existing mortgages with another lender.
Last month, a study by Fitch Ratings, the credit ratings agency, found Queensland remained the worst-performing state for mortgage defaults, while sea-change areas and first-home buyer belts in New South Wales were also at worryingly high levels.
The worst-performing suburbs in Australia, judged by the value of mortgage-holders behind in their repayments, are Nelson Bay (NSW), Hoxton Park (NSW), Surfers Paradise (Qld), Eagle Vale (NSW), Budgewoi (NSW), Arncliffe (NSW), Rooty Hill (NSW), Cessnock (NSW) and Helensvale (Qld).
Queensland has six out of the 10 struggling regions led by Ipswich, Gold Coast east and west, Logan City, Caboolture Shire and the Sunshine Coast.
Eleven of the 20 worst performing suburbs are in NSW, seven of them in western Sydney.