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Thursday, 19 February 1987
Page: 260


Senator BROWNHILL —Is the Minister representing the Minister for Housing and Construction aware that the Housing Loans Insurance Corporation, the largest mortgage insurance agent in Australia, has had an increase in claims of 150 per cent? Is the Minister further aware that approvals for new homes fell by 6.3 per cent in the three months to November last year? Given that interest rates are at their highest since the Depression and that this is the International Year of Shelter for the Homeless, what steps is the Government taking to ease the burden on home buyers other than confident predictions by the Prime Minister that interest rates would fall significantly this financial year? If interest rates in fact do not fall, what alternatives will the Government provide to the many thousands of people who will be forced to walk out of their homes or off their farms because of an increasing inability to meet interest payments?


Senator RYAN —I have some information on the Housing Loans Insurance Corporation. The Corporation recorded its highest ever total claims level in 1985-86. Claims paid totalled $3.2m and the increase in the provision for impending claims was a further $4m. The $3.2m pay-out figure translates to only around 200 cases across Australia for the whole of the year. Most of these claims were in respect of home ownership loans. However, most people who fall behind in their mortgage repayments and are forced to sell their homes still usually make a profit. Although the level of claims appears high relative to the 1984-85 level, which was $3m, there was an abnormally low claim rate in that year. As a proportion of loans insured, claims in 1985-86 were only about 0.26 of one per cent-less than in 1981-82 and less than in 1982-83.

While the number of loans resulting in claims involved grants under the first home owners scheme, on a proportional basis these cases were broadly in line with the number of first home ownership cases insured. Claims were mainly in Queensland, interestingly enough, and to a lesser extent in New South Wales. Since the end of the 1985-86 financial year, the numbers have continued to rise in all States with New South Wales showing the highest rate of increase. Through the mortgage and rent relief scheme, the Federal Government provides funds to the States to assist borrowers experiencing genuine short term difficulties in meeting their mortgage commitments.