Short term relief for mortgage stress

Lower interest rates and government payments have relieved mortgage stress in Australia but it’s predicted to rise again later in the year.
The number of households experiencing mortgage stress fell 5.5 per cent from February to March 2009 to reach 587,000, according to the Fujitsu Mortgage Stress-O-Meter monthly update.
The number of severe stressed households fell 36 per cent, with 96,500 households still at risk or having to sell up or lose their homes.
Mild stress increased 6.2 per cent, explained by the fall in severe stress, as well as lower incomes due to the reduction of overtime hours and falling investment incomes.
Martin North of Fujitsu Consulting says falling interest rates and government intervention have significantly improved mortgage stress levels.
"This is good news in the short term and the additional government payments will reinforce this trend over the next couple of months," he says.
"We still expect to see a significant rise in mortgage stress later in the year, as unemployment continues to bite."
"Recent interventions have definitely postponed the inevitable but for example, if unemployment reached 7.5 per cent by December 2009 this would translate into over 1.2 million households experiencing some degree of stress, of which over 460,000 would be close to the edge."
The report drew attention to first homebuyers, pointing out they're still entering the market with small deposits. North says this is a concern because they're left with very little protection against falling house prices and potential unemployment.
"If unemployment were to rise by 7.5 per cent by December, up to one-third of the 125,000 first-time buyers who entered the market in the last 12 months could find themselves in mortgage stress," he says.
"It would be wise to ensure prospective purchasers had a