A recent survey shows a dramatic jump in the number of borrowers in western Sydney facing serious financial problems.
The survey of almost 1 million mortgages throughout Australia by Fitch Ratings, one of the three big global debt-ratings agencies, shows that in some western suburbs more than 6 per cent of mortgage holders are 30 days or more behind in payments.
This compares with a national average of just 1.88 per cent. And since the survey, which was up to March 31, interest rates have increased.
Wetherill Park topped the list as the nation's worst-hit suburb at 6.7 per cent, up from 4.9 per cent last September.
Also in the country's top 10 hardest hit suburbs are St Marys with 6.3 per cent, Guildford with 6 per cent and Rooty Hill with 5.1 per cent.
Meanwhile, a recent research paper on mortgage stress by Fujitsu Consulting and JP Morgan predicted that by September nearly 300,000 new households nationally would join the 700,000 (or 13 per cent) of households already experiencing mortgage stress, and 40 per cent of those would be under severe stress.
By definition people under mortgage stress are not your regular battlers, because to have a mortgage means you own your own home. They are supposedly living the Australian dream.
In fact, according to Mike Young, a financial counsellor with Lifeline Western Sydney, most of the people who are now in serious financial trouble were doing quite nicely six or seven years ago.
Mr Young said at that time many people who would normally not have thought of buying their own home but who had two jobs plus overtime, decided to borrow the best part of 100 per cent to buy a house and everything looked rosy.
Now, with a change in the economic environment, things are looking desperate for many of these people.
"A lot of people that we see now with serious financial problems are in their late 40s and early 50s and six to seven years ago they were in a good financial position.
"Many even bought an investment property. It was the thing to do with the market going up and easy credit.''
Mr Young said as soon as people found themselves using their credit cards to help cover mortgage repayments they should seek financial advice.
"People don't realise that as soon as they start using credit cards to pay the mortgage repayments or pay living expenses they are in big trouble.
"They can go for three to four years using credit cards and then all their credit is used up.
"If people come to us before they have problems meeting mortgage repayments and resort to credit cards, we can do something and lenders are willing to do something.''
Mr Young said it was not uncommon for people to have bought a house five years ago for say $350,000, borrowed the whole amount, and since then also built up $80,000 in debt on their credit cards and the house is now worth $280,000.
He said causes of people's financial problems varied but the main factors were excessive use of credit, unemployment and relationship breakdown.
However, he said the underlying cause was that people often lived a lie, living lifestyles they could not afford.
He said credit was readily available and financiers continued to find new ways to entice consumers to borrow more.
HOW TO GET HELP
THE Financial Literacy Foundation's Paul Clitheroe said Australians sometimes needed a hand with managing their money but "the good news is that you're not on your own''.
"There are lots of places that can give you the financial information or advice.''
People can find general information at www.understandingmoney.gov.au and www.fido.gov.au.
Centrelink's Financial Information Service is at 13 23 00 or visit www.centrelink.gov.au.
To find a financial counsellor, visit www.affcra.org or look up "Community Advisory Services'' in the Yellow Pages.
You can get assistance from Parramatta's Moneycare on 9633 5011 or www.salvos.org.au and Lifeline Western Sydney on 13 11 14 or www.lifeline.org.au/westernsydney .
There is also the Credit and Debt Hotline on 1800 808 488 and Office of Fair Trading on 13 32 20 or www.fairtrading.nsw.gov.au.
Email a friend