Housing downturn: an Xmas debt bomb that's about to explode

Almost one in four Aussies have blown the bank over Christmas, struggling to meet the mortgage and finding themselves in financial stress, new data shows.

It’s well known that Christmas is an expensive time of year, but figures from comparison site Finder show 23 per cent of families have struggled with their mortgage payments at least once during the festive season.

That figure is worst in South Australia (29 per cent) and lowest in NSW (21 per cent), with many reporting that the expensive season left them in a financially precarious spot.

What’s more concerning is the 6 per cent of Aussies who reported struggling to meet their payments over the past three Christmases. Meanwhile, at least 12 per cent of borrowers have struggled at least once in the past three years.

According to UBank’s Science of Spending and Saving Experiment, 35 per cent of Australians live payday to payday.

Finder money expert Bessie Hassan said households needed to budget at Christmas time to avoid the unwanted present of mortgage stress.

“Households have a lot of extra costs at Christmas from presents to family feasts and forking out for a holiday,” she said.

“Don’t let the season of giving cost you your house.”

Wollongong dad Rory O’Grady told news.com.au he was stressed out just thinking about paying the mortgage over Christmas.

Three years into a mortgage, he and his wife have just borrowed more to fund renovations and fixes to the property.

He said he and his wife were forced to cut down on their food bills to make sure their kids got something for Christmas.

“I don’t think I’ve missed a payment but I’ve sort of struggled to make ends meet and something else gets sacrificed,” he said.

“Before we used to go away, but now we’ve got the mortgage so we can’t afford it.”

What this all goes to show are the numbers of Australians who struggle to put presents under the Christmas tree and pay their debts.

WHY THE CHRISTMAS CRUNCH?

Data from Finder shows Australians spend $1325 each on average on Christmas.

Previous data has also shown Aussies run up $1727 on credit card debt alone in the silly season, with one in three relying on credit cards to fund their Christmas expenses, not to mention the $464 average spend per person on Christmas gifts.

Realestate.com.au financial services manager Andrew Russell told news.com.au that Christmas time required “extreme discipline around your personal expenses” to avoid the peril of missing a mortgage payment.

Low wage growth in Australia is likely to make the problem of stress over Christmas worse, as outgoings grow and wages slide.

“Our incomes are remaining flat and cost of living is rising for most families and that’s how people can get into stress,” he said.

“That’s why it’s very important that people live within their means particularly in this current lending environment.”

- news.com.au