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Our local economy is far more fragile than Council might understand

Dear Beagle Editor Comments regarding ABC 4 Corners program on Mortgage Hotspots. I write to you with regard to the above program and would wish to comment on the effects within postcodes within our area and postcodes nearby. Following the program a website was made available for people to examine their own postcode areas. The postcodes are indicative and may include multiple areas. The model provided allows for the examination of the effect that an increase in interest rates on mortgage stress would have in that area. Mortgage stress was defined as when a household’s income does not cover its outgoings, including mortgage repayments. Across Australia with current interest rates, more than 820,000 households are in mortgage stress. That is an average of one in four. Within Australia for every $1 of income earned Australians have nearly $2 of debt. Most of the postcodes in regional and remote Australia reveal that mortgage stress is worse than in major capital cities. If we examine postcodes within our area and nearby and factor in 0.5% interest increases up to 1.5% a very disturbing picture arises. I have not raised the interest rate beyond 1.5% as most analysts think that rises above 2 percentage points are unlikely. They were last at this level in November 2011.


The report emphasises that with a combination of flat incomes, rising costs and large mortgages, stress spreads quickly, even with small rate changes. In 2015 the proportion of income required to meet mortgage repayments rose from 2.4% to 38%. I would trust that the above comments may raise both concern and discussion. Mortgage households are facing increased pressure and any additional increases in the costs of living including power, food, fuel and council rates or job losses will only lead to further stress. The effect of any change in property values is not part of this discussion. When we see almost 1 in 2 mortgage households could suffer stress following a potential increase in interest rates, and our local and regional areas likely to suffer high mortgage stress it is imperative that our local councils be aware of the impact that their price increases will have on the community. Have our local councils factored in the effect of any increase in rate rises might have on our communities? Name & address supplied

#Community #Opinion #latest #Council #LocalStateFederal #Weekly

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