Mortgages: rise in living costs make payments difficult

Like all countries throughout the world, Australians have faced financial hardship over the last few years as a result of the global recession. Fortunately, in relative terms, the Australian economy has not been hit as hard as many of the larger global economies, such as the USA and major Asian and European countries. However, many companies are still under great strain. As a result, prices and other living costs have risen faster than salaries.

This has had a massive knock-on effect for the whole economy and combined with recent interest rate increases, this results in difficulties for mortgage holders and their ability to make repayments.

Cost of living is made up of a wide variety of factors, such as household bills, food and other expenses. These make up a large proportion of our costs of living. However, there are many other broader factors which may be considered, such as interest rates for mortgages, unemployment and exchange rates. House prices have also increased substantially in the past few years, with some writers estimating that they are substantially overvalued. This, combined with rising cost of living is unsustainable, and makes mortgage payments much more difficult for homeowners.

Homeowners who are facing difficulties making payments may be able to refinance their mortgage arrangements or possibly take a payment holiday. If this affects you, discuss your situation with your mortgage provider or broker. However, consider any changes carefully, as you don’t want to end up in a worse situation than before!