Distressed listings fall, but some borrowers doing it tough

There's been a welcome reduction in properties being urgently listed for sale, which usually occurs due to financial difficulty on the part of the vendor.

There were 5,100 ‘distressed listings’ across Australia in May, which was 2.5% less than the month before and 8.5% less than the year before, according to SQM Research.

That said, there are some borrowers struggling to meet their repayments.

Research from Moneysmart, the website managed by ASIC, the financial services regulator, found that 47% of survey respondents with debt had struggled to make repayments in the past 12 months. The main reasons for this were cost-of-living pressures, reduced income and unexpected expenses.

Nevertheless, 30% of respondents said they would not seek hardship assistance from their lender, with 42% of those saying they would rather sell belongings / assets and 40% get a second job before applying for assistance.

“Customers in hardship are entitled under the law to request assistance,” ASIC Commissioner Alan Kirkland said.

“The message for Australians experiencing financial stress is that banks or lenders have a responsibility to support customers.”

How lenders support struggling borrowers

If you’re finding it hard to keep up with your mortgage repayments, please contact me immediately, so we can discuss the situation and plan how to move forward.

Generally, it’s best to let lenders know sooner rather than later, because they tend to be more flexible if you get ahead of the problem.

Lenders can offer a range of support, including:

  • Deferring interest payments on a case-by-case basis.
  • Allowing for the loan to be restructured, without incurring the usual establishment fees.
  • Waiving fees and charges, including break costs on early access to term deposits.
  • Consolidating debt, to make the repayments more manageable.
  • Offering additional finance to help cover cash flow shortages. 
  • Deferring upcoming credit card payments.
  • Increasing emergency credit card limits. 

Many people experience financial difficulty from time to time, so this is not something to be embarrassed about. 

Published: 18/6/2024

Have a question?