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Until now the more affluent sections of the community have appeared immune to interest rate rises. Despite 12 consecutive increases from the RBA, the upper end of the market in most cities has carried on regardless.
But now, according to the JPMorgan/Fujitsu Mortgage Industry Report, the latest rate rises have taken us into new territory. Not only do we have ?mortgage stress?, but now we also have ?affluent stress?.
The report says interest rate rises have combined with margin calls on share holdings and rises in private school fees to draw more affluent households into the web of those struggling to make ends meet. Wealthy professionals living by the beach will rank alongside battlers in the western suburbs of Sydney.
The report predicts that the number of households under financial stress will quadruple this year, with 700,000 households suffering some form of stress. Added to the battler households sinking under mortgage stress will be ?exclusive professionals or mature stable families? coming under affluent stress.
It says problem affluent suburbs in Sydney will include Bondi, Chatswood and the Northern Beaches.
By the middle of this year, JPMorgan and Fujitsu expect 300,000 households around Australia to be in the ?severe stress? category (which means missing mortgage repayments or being forced to sell a home) and another 400,000 under ?mild stress?, which may include using credit cards to pay the mortgage (never a good sign).
ENDS
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