The Global Financial Crisis has hit the world economy hard, so hard in fact that it has its own acronym – the GFC. While the GFC has affected Americans the worst, the extent of financial hardship in Australia has gotten worse over the past year.
More about financial hardship in Australia
The statistics regarding financial hardship in Australia have started to reach the media, and we now know more about the extent to which the GFC has affected Australians.
The Sunday Telegraph has reported that over 55,000 Australians have been granted hardship concessions or mortgage holidays over the past one year. Since February, at least 31,000 financial hardship applications have been lodges. Many of the large banks, such as Westpac, Bankwest, ING Direct and Citibank have provided information; however, some other larger financial institutions such as Commonwealth Bank Australia have not provided data – which means that the actual number of Australians facing financial hardship is higher than the number reported.
Since April, over one hundred Australian banks have signed up with the government’s financial hardship principles, which are designed to help home owners in difficulties. The concept behind this is to allow home owners time to recover their finances and avoid being repossessed.
However, many banks, such as Westpac and St.George have been offering such benefits to home owners even before the government initiative was launched. These two banks alone have granted 41,000 hardship concessions over the last year; Westpac has granted 15,000 since February.
Since January, 3,300 ANZ mortgages have been deferred. Bankwest has deferred nearly 10,000 mortgages since January. It is estimate that between one half to one third of all these deferments have gone to residents of New South Wales.
Looking into these figures about financial hardship in Australia in more details, ING has revealed that 37% of hardship applications mentioned unemployment as the reason for their distress. 20% have requested a deferment for six months, one third have requested a deferment for three months and 12% requested that they only pay off their arrears.
Citibank reports that there has been a 300% increase in financial hardship cases in the last eleven months when compared to the previous year. Citibank has given assistance to less than 1000 families.
NAB has revealed that their financial hardship applications have doubled since April.
However, a glimmer of hope has been provided by a Westpac spokesman, who states that despite the hardship cases, over 80% of Westpac customers are actually ahead in their mortgage repayments.
