According to Australian new sources, mortgage stress in Australia is rising dramatically and flowing into middle class housholds, putting downward pressure on banking profits as per a survey. The survey conducted by JP Morgan and Fujitsu Consulting finds that about 600,000 households are likely to experience at least mild mortgage stress by the end of the year.
Stress is being caused by declining housing affordability and rising interest rates, with the latter partly due to the squeeze in global credit markets.
Fujitsu defines mild mortgage stress as occurring in households that have prioritised or curtailed spending to pay the mortgage. Severe stress occurs when there is a significant risk of default.
JP Morgan is forecasting the global credit crunch, triggered by the US sub-prime mortgage crisis, will bring market share back to the major banks, which have more stable funding sources.
Slowing individual credit growth would be compounded by a drop off in corporate lending related to the credit squeeze.
Apparently, the issue is quite severe in certain parts of Australia such as western Sydney and some parts of Melbourne.
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.