An article appeared in the Courier Mail on Saturday July 26th about the “Mortgage Stress” phenomenon.

It’s sad, it’s tragic, a young couple forced out of their home because of rising interest rates.

But what really is mortgage stress?

I know that interest rates have risen, that fuel is up, I have a mortgage and a car.  I also know that purchasing your dream home first time around probably is not the smartest thing to do and I also know that filling your house with all the latest electrical gadgets on 1,000 days interest free is also not the best way to ensure your financial security.

I also seem to recall a time when banks looked at your income and calculated your loan repayments based on your ability to repay.  I also remember a time when first time around a young couple starting out maybe purchased a unit, or a low set three  bedroom brick (with no ensuite) in the suburbs and traded up to the fancy Mcmansion with four bedrooms, two bathrooms and a media room.

I also remember a time when interest rates were at 19%.  That creates real mortgage stress.

Perhaps the lesson to be learned from the current credit crisis and resultant mortgage stress, (which in my travels I have seen a lot of) is that much of it is self inflicted. 

Why? – Well 1,000 days interest free, no deposit, no repayments for 12 months, whatever the offer, it all means that you are committing your future income on the purchase of some sort of electrical appliance that you will take home now, get used to, enjoy it and then get a shock when you have to start making the repayments that you forgot to budget for.

Add in an interest rate rise or two and you have a double whammy of increasing mortgage repayments as well the repayments on last year’s television set.

No wonder we are hurting, we are still paying for last year’s spending and committing next year’s against items that have lost their gloss and shine.

Maybe it’s time we all – and this includes the lenders – take a step back in time, tone down our expectations and live to our incomes.

Please Note:

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