The government has often boasted how Australia has dodged the worst of the global financial crisis, but a study released today shows the length some Australian’s have gone to stay afloat.
Despite National Accounts showing the aggregate of all households in Australia are spending 6.6% of their disposable income on dwelling repayments, over 50% more than when Interest rates peaked at 17% in 1989, Australian’s are shameful of losing the family home. Shame has prevented many from contributing to the survey.
The study conducted by the University of Western Sydney and supported by the Reserve Bank of Australia interviewed people suffering mortgage stress. It found “people are literally eating the bare minimum – just rice – obviously looking after their children, but putting the repayment of the mortgage above every other thing that they could possibly devote an expenditure to” according to Professor Phillip O’Neill from the University of Western Sydney. He points out this is not just in the past tense – it is still happening.
The ABC reports he goes on to say the Federal Government should be careful about overstating how easily Australia got through the crisis when so many people are still struggling.
“But he says the drastic moves my some homeowners has helped prevent the kind of mass mortgage defaults seen in the United States, during the global financial crisis.”
“If we did have large-scale defaulting in a neighbourhood in Australia, we would have a toxic affect spreading of negative equity and that would be alarming,”
With so little money being spent in the local economy, business and retailers are bearing the brunt of the cut back in spending. This is likely to result in jobs loses as the crisis continues to deepen, only exacerbating the problem.
» Homeowners ‘living on rice’ to pay mortgage – The ABC, 30th June 2010.