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Date Published : Thursday, April 24, 2008
The current financial crisis which is being felt in Australia and world wide was recently described as the "perfect storm" for consumers with major debts by one leading expert.
While the current climate will make almost one million households across Australia experience mortgage stress by September this year - according to research from Fujitsu - those with debts will be able to use this period to shop around for debt consolidation loans, or better deals on their mortgages.
Nationally, as many as 200,000 families could lose their homes as mortgage repayments get too much for them and house prices could fall by as much as 25 per cent.
Martin North, managing consulting director of Fujitsu Consulting, told the Sydney Morning Herald: "We've got all these things coming together: global trends of recession in the US and potentially in Europe; the credit crunch continuing to lift rates for consumers and also to banks and business.
"We have [housing] affordability at its lowest level and debt as high as it's ever been. I think all of these things together are creating the perfect storm."
To survive the next few months, consumers are advised to shop around for best deals on home loans and personal loans, while attempting to avoid refinancing.
According to Mr North, while refinancing a mortgage can be very attractive to many homeowners, it does not solve all the solutions and can end up in the sale of the property just a few months down the line.
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