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Interest rate hikes push 250,000 extra households into mortgage stress.



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WAYNE SWAN MP Federal Labor Shadow Treasurer

INTEREST RATE HIKES PUSH 250,000 EXTRA HOUSEHOLDS INTO MORTGAGE STRESS

John Howard and Peter Costello must now accept responsibility for the devastating impact on households of the eight straight rate rises since 2002 after new Census data shows levels of mortgage stress have skyrocketed nationally.

The number of households suffering mortgage stress - that is, losing more than 30 per cent of their gross income to mortgage repayments - has almost doubled, increasing by more than a quarter of a million households between 2001 and 2006.

• In 2001 288,916 households were battling to meet mortgage repayments; • In 2006 547,052 households were stretched - a jump of 90 percent.

According to the Census data more than one in four households with a mortgage (27.2 %) were stretched with their mortgage repayments in 2006.

This alarming picture is likely to have deteriorated even further since, with two of Mr Howard’s eight rate rises coming into effect after the Census data was collected.

As the 30 percent mortgage repayment benchmark is on gross household income, the reality is that the proportion of post tax disposable income will be much higher.

For many families the figures would correspond to 40 to 50 percent of their post tax disposable income.

A state by state breakdown shows significant rises across the nation but the pinch is really being felt in Sydney, Melbourne, Brisbane, Hobart and Adelaide:

• Sydney, up 97.5 per cent • Melbourne, up 108 per cent • Brisbane, up 101 per cent. • Hobart, up 88 percent • Adelaide, up 75 per cent.

The Census data shows just how badly Mr Howard has let Australian families down after saying he could be trusted to ‘keep rates at record lows’ at the last election.

It also shows how out of touch John Howard’s claim is that ‘working families have never been better off’’ and that households are comfortably affording the eight back to back interest rates rises since 2002.

12 July 2007 Contact: Matthew Coghlan 0415 098050