Credit cards major issue for homeowners

Monday August 17, 2009

Australian homeowners seem to be struggling not only with their mortgages but also with credit cards after a recent survey found that the majority carry both forms of debt.

Mortgage insurer Genworth found that 71 per cent of homeowners were responsible for both a mortgage and credit cards debt and carry over an unpaid debt on their credit cards. However, Genworth also found that 52 per cent of people holding credit cards debt carry over this debt while the remainder make their repayments on time.

Some industry experts have been surprised by the high number of people carrying over their mortgage and/or credit cards repayments, especially considering the rate cuts the Reserve Bank of Australia has made over recent months.

Since the RBA began these cuts to the reserve rate, the average Australian mortgage interest rates have declined around 3.6 per cent with credit cards declining around half that amount.

These latest figures are not the end of bad news for Australian homeowners with housing prices surging in some of Australia's usually most affordable suburbs as a result of the first home owners grant and low interest rates.

However, the majority of Australian banks are now responding to the Federal Government's cash handouts by restricting the amount of money they are willing to lend first-home buyers. Banks are offering discounted standard variable mortgage rates.

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