Posted on July 23, 2010 11:07
We all know the pressure facing all Australians in this current economic climate. With the increase in petrol prices, groceries and just about everything else, we are being forced to watch where every cent goes. This maybe something new for some, but for the residence of Western Sydney who have been tightening their belts for at least the past two years, there is nothing left to give.
The signs of financial stress were evident in 2006. A study commissioned by Wesley Mission, found that ‘one in every seven households in Sydney’s west where on the edge of insolvency. Fifteen percent of the 400 families surveyed, couldn’t cope with an extra payment of $40 per month.”
Since these findings, we have seen several interest rate rises and the extra $40 per month that families couldn’t cope with, for some has turned into $40 per week.
The Reserve Bank’s Financial Stability Review in March 2007 stated that ‘While the overall picture suggests that, in aggregate, the household sector is coping well with the higher levels of debt and interest servicing, there are some limited pockets where financial stress is evident. Areas of western Sydney, in particular, look to have been adversely affected by the fall in residential property prices, with a disproportionate number of households in this area taking out loans with high loan-to-valuation and debt-servicing ratios near the peak of the house price boom.’
With the Reserve Bank specifically mentioning western Sydney as an area suffering financial stress, this has caused the NSW Parliament to sit up provide assistance to those on the front line. Community organizations were encouraged by Premier Morris Iemma’s injection of a further $1 million to the financial counselling sector. This will enable more clients to be assisted free of charge and cut back on waiting lists for services.
In May this year the Parliament of NSW addressed the issue of Mortgage stress. Mr Allan Shearan (Londonderry) brought the following to the attention of Parliament, ‘‘According to Fujitsu Consulting, an organisation that measures mortgage stress on a regular basis, such stress particularly affects young growing families and mainstream suburban families. I need not tell the House that Western Sydney is especially vulnerable in this regard. In February, 46.53 per cent of all New South Wales writs in possession issued by the Sheriff’s Office were for homes in the Western Sydney area. Blacktown is hardest hit, closely followed by Fairfield, Bankstown, Liverpool and Auburn. While Western Sydney constitutes one-quarter of the State’s population, it accounts for almost half of all the writs in possession.”
These figures clearly outline that homeowners need to be educated on their options with regards to financial matters. Many people have never heard of the Consumer Credit Code, which enables people suffering hardship to renegotiate the terms of their contract. If they are unable to reach an agreement with their credit provider they can then seek assistance from the Office of Fair Trading.
Most people don’t think of seeking assistance until they are in arrears by two or three months. By that time, they have incurred several fees and charges and have made payment plans they cannot keep.
The key to financial difficulty is not to push it into the too hard basket, but to seek assistance as early as possible.
Free Financial Counsellors operate throughout the western suburbs through various community organisations. The Consumer Credit Legal Centre can also be contacted for free legal advice.
By Jodie Lewis
Financial Services Manager