Mortgage Relief Requests Double
Sydney Morning Herald
Friday June 16, 1989
The number of homeowners seeking urgent Government help because they are unable to meet mortgage repayments has doubled, putting strong pressure on a$3 million emergency fund.
Under the NSW Mortgage Assistance Scheme, people unable to meet their mortgage repayments can qualify for an emergency, interest-free loan provided they meet certain criteria, including a means test.
From January until the end of last month, more than 350 people had been granted emergency loans - nearly twice the number helped for the same period last year.
Applications for help are running at more than double last year's figures and are expected to accelerate with the increase in mortgage interest rates to 17 per cent.
A spokesman for the Minister for Housing, Mr Schipp, said yesterday an extra $1 million had been allocated to the emergency fund, taking it to $3 million.
But it was now expected that this would not be enough, because of the increases in needy cases.
"We think we will easily exceed that," the spokesman said.
The pressure that the lift in mortgage rates has put on home owners is also showing in a large rise in the number of applications for finance under the Government's cut-rate Low Start and Affordable home loan schemes, which offer loans at 14.5 and 15.9 per cent.
The rise in applications is being caused by people who wish to switch from higher interest rate loans to cut-rate Government loans.
Under the Mortgage Assistance Scheme, interest-free loans of up to $7,500 are available for people unable to meet home mortgage repayments. In special cases, the loan can be as high as $15,000.
The money is lent only to applicants whose family income is no more than$54,000 and, generally, an applicant must have suffered either illness, an accident, marital breakdown or job loss.
People are given up to a year until they must start repaying an emergency loan.
However, the Department of Housing believes that most people unable to meet mortgage repayments do not meet the emergency loan criteria and are, instead, selling their houses and moving back onto the home rental market.
"We only get the real, dire cases. Most people are obliged to sell and they go back to renting," Mr Schipp's spokesman said.
"Only people able to meet the criteria come to us."
The Government now expects that the number of people forced out of home ownership and on to the rental market because of increased interest rates is likely to increase the public housing waiting list in NSW.
An updated figure of the numbers on the waiting list is being prepared for Mr Schipp.
At the end of June last year, 86,000 people were awaiting public housing in NSW.
"We are going to get a lot more people coming to us for mortgage assistance, rental assistance and for public housing," said Mr Schipp's spokesman.
© 1989 Sydney Morning Herald
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