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Foreclosures rise as more borrowers fail to repay

| 03.01,12. 12:58 AM |


Foreclosures rise as more borrowers fail to repay

January 3, 2012

BANKS and building societies have repossessed 22.5 per cent more homes than in 2010, with western Sydney and big regional centres in NSW hardest hit.

Lenders asked the NSW Supreme Court to issue 2466 writs of possession against borrowers in default in the 10 months to November last year.

The number of writs issued in the same period in 2010 was 2143, indicating heavier financial pressure on mortgage holders.

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Yet-to-be released repossession figures for November and December are likely to indicate if the Reserve Bank's cut in interest rates by a total of 50 basis points in those months reduced foreclosures.

The total annual figure is unlikely to surpass the post-global financial crisis figure of 3381 writs issued, of which 1194 were executed, in 2009.

A number of beachside suburbs on the central coast, such as Terrigal and The Entrance, had high numbers of repossessions, as did a string of western Sydney suburbs, from Bankstown to Blacktown.

The major regional centres of Dubbo and Orange, and Broken Hill in the state's far west, were also hard hit.

At the other end of the property scale, a newly built four-bedroom, six-bathroom mansion in Vaucluse with views over Parsley Bay to Sydney Harbour was sold by the mortgagee in possession for $3 million last month.

In response to the growing number of homeowners struggling to meet their repayments, the Australian Bankers' Association has launched a website,, to help encourage customers to contact their bank before foreclosure is the only option.

The association's chief executive, Steven Munchenberg, said banks will only repossess a property as a last resort.

The main causes of financial hardship - job loss, illness and relationship breakdown - tended to be short-term, he said, and customers could apply for a ''repayment holiday'' or interest-only loan until their situation improved.

''People often try to hide the fact that they're struggling from their bank, but that makes it harder for the bank to help,'' he said.

The Australian Council of Social Service's chief executive, Cassandra Goldie, said the figures confirmed NSW's high level of ''housing stress'', when low- to middle-income households pay more than 30 per cent of their income on housing.

High repossession rates had a negative flow-on effect for those on the lowest incomes, Dr Goldie said. ''The fewer people that are able to pursue home ownership, the more demand there is for affordable rental properties,'' she said.

The lobby group Australians for Affordable Housing (AAH) said 12 per cent of NSW residents with a mortgage were in housing stress, rising to 15 per cent of first-home buyers.

In the past 10 years house prices had risen by 147 per cent while incomes had risen by only 57 per cent, it said.

AAH's campaign manager, Sarah Toohey, said households were paying more of their income on mortgage interest payments today than when interest rates were 17 per cent.

''That's because households have had to borrow more to get into the housing market,'' Ms Toohey said.

The median price for an established house in NSW is $637,400. The average first-home loan is $307,000.


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