Mortgage Madness

Sarah and I were watching some show on channel 9. It was about some people who were experiencing mortgage stress and the show was basically going to get them out of debt by tarting up and selling their house. Apparently they had a mortgage on their home, inherited some money and then used it to get a second mortgage for another house in an attempt to become a today tonight 'property tycoon'. Obviously this hadn't worked out so well for them and they promptly went deeper and deeper into debt. They then went into their super for more money which of course didn't help. So pretty much out of misguided avarice the decision makers in the family had flown their financial future into the side of a mountain, when they had an opportunity most people can only dream about to secure their own home.

We couldn't help wondering as we watched the show, why couldn't channel 9 have picked a family who were in financial trouble as a result of a lost income or something else, instead of some people who were trying to get rich via property speculation. As someone who doesn't have a house and views actually buying one as a goal so unachievable it's practically pointless planning for it, I guess I don't have much sympathy for people who own one house and, instead of paying off the house, buy another one to try and turn into millions of dollars like they see on TV, making it that much more difficult for people who have no house to get one. I feel that there are far more people who could use that help.

Disclosure: Sarah and I have received neither of the govt's two stimulus packages. We haven't got kids, Sarah is a student but hasn't been on Centrelink for 3 years or so and I started my job last April and so haven't earned enough to qualify for the tax hand out. However it's not like we're starving or anything. We've been lucky enough to have parents able to support us in really vital ways, like providing us with a place to live. I just don't understand why help from the government seems to be based on maintining people's lifestyles regardless of circumstances.

The govt. recently increased the level of support for homeowners who lose their jobs by increasing consumer credit hardship restrictions from $300,000 to $500,000 contract value. I guess you could make the argument that that reflects the increased cost of housing these days but given $300,000 is around the average house price in Australia I'd make the counter argument that if you're unfortunate enough to have lost your job and your mortgage is worth $500,000, you should sell your house and adjust to your new situation. When we went down to living off one youth allowance income, we made adjustments, cut out just about everything that wasn't essential, sold stuff we didn't need and got through it. Perhaps the most galling thing about keeping people in half-million dollar homes is that a lot of people bought the houses they own during the last economic downturn, so that means now, even when there is a downturn houses are still priced out of reach of people like us.