Credit cards hide mortgage stress
The number of households defaulting on mortgage repayments or at significant risk of default is predicted to grow from 70,000 now to 113,000 by the end of the financial year according to a report by JPMorgan and consultancy firm Fujitsu. The report also forecasts that the number of households which need to curb their spending to meet mortgage repayments will explode from 170,000 to 487,000 over the same period. Fujitsu's managing consulting director, Martin North, said “Severe stress has spread from the traditional battlers to middle Australia. In addition, a wide range of households are now under mild stress, requiring them to max out their credit cards to keep afloat.” JPMorgan banking analyst, Brian Johnson, warned that credit card debt is masking the level of mortgage stress. “Average credit card outstandings have grown from the equivalent of one month's disposable income in 1997 to the equivalent of three month's income in 2007,” he said.