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Date Published : Friday, March 14, 2008
Australia's mortgage crisis is showing signs of affecting the most affluent members of society for the first time, a new report has claimed.
According to the latest JP Morgan/Fujitsu Mortgage Industry Report, as many as 700,000 households across the nation could come under some sort of financial stress regarding home loan repayments by June this year.
The study found that while 300,000 are expected to fall into the worst "severe stress" category, just about every class of society is likely to be affected by the crisis.
Rapidly increasing house prices, an uncertain global financial climate and rising interest rates are all said to be behind the problems facing Australia's homeowners.
Recently, the Reserve Bank of Australia increased interest rates to 7.25 per cent - the highest level for 12 years - and mortgage lenders across the country have followed suit.
Among the "problem" affluent suburbs in Sydney are Bondi, Chatswood and the Northern Beaches.
Co-author of the report Martin North told the Australian: "This affluent stress is hitting customers who are normally insulated from rate rises, but a combination of factors - rising rates, hikes in school fees and margin calls on shareholdings - is creating a perfect storm Australian banks cannot afford to ignore."
Mr North added that for every 0.25 per cent interest rate rise decided on by the Reserve Bank - of which there has been two so far this year - "about 75,000 additional people (will) tip over from mild to severe stress and 150,000 go from no stress to mild stress".
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