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  • High rates took toll on families
  • By Nick Gardner
  • The Daily Telegraph
  • 23/12/2008 Make a Comment
  • Contributed by: The Rooster ( 264 articles in 2008 )
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THE recent interest rate cuts have came too late for many with figures showing almost 1300 families in one state had their properties repossessed in the first nine months of this year.

Many of the 1300 families in New South Wales were pushed over the edge by what economists argue were unnecessary rate increases earlier this year, and have lost their homes after falling fractionally short of their mortgage payments.

"It's a travesty" Consumer Credit Legal Centre NSW senior solicitor Katherine Lane said.

"I have seen too many people lose their property who would have been fine if they could have held on for just a little longer.

"But when house prices are falling banks look to repossess much more quickly to get their money back and without legal protection borrowers don't stand a chance."

In the three months since the Reserve Bank started cutting the official cash rate in September, repayments on a $250,000 mortgage have fallen about $500 a month - more than enough for many borrowers to have avoided repossession.

"The Reserve Bank has realised it raised rates too far and is trying to make amends, but it has come too late for many borrowers," AMP chief economist Shane Oliver said.

While rates peaked at 7.25 per cent in March, Mr Oliver said they should never have risen above the 6.25 per cent level of July last year.

"The rate cut in August 2007 was the first mistake," he said.

"We were in a credit crunch but the RBA focused on inflation instead of the real economy. The downturn we are having now is almost entirely of our own making - the global slowdown hasn't really hit us yet."

Ms Lane said she has represented many homeowners who were falling short on their repayments by as little as $100 a month and were facing repossession, but with legal help managed to fight off the banks until the rate cuts kicked in.

"Now they're fine - they're meeting their repayments and still have their home," she said.

She said the Federal Government needs to act to give better protection to homeowners.

"At the moment a bank does not even have to respond to a borrower who pleads hardship and wants to restructure their repayments," she said.

"We want a dispute resolution scheme which can rule on whether a bank is acting reasonably - at the moment they can do as they wish."

Figures from the NSW Attorney General's Department show a total of 3194 writs of possession were issued in the nine months to the end of September, of which around 40 per cent were executed. "It shouldn't be that high," Ms Lane said.

Source: https://www.news.com.au/business/money/story/0,28323,24836534-5013951,00.html


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