KEY POINTS:
SYDNEY - Rising unemployment this year is likely to almost double the number of households at risk of forced sale or foreclosure, erasing the effects of falling interest rates and petrol prices, according to a study.
The number of borrowers under mortgage stress, described as those having to reprioritise expenditure or refinance to make repayments, will rise by 46 per cent to 929,000 by July, from January's level, according to Fujitsu Australia and New Zealand.
Those under severe stress, who are behind in repayments or trying to sell or being foreclosed, will increase 87 per cent to 302,000 by July.
"There are some shadows on the horizon," Fujitsu Consulting managing director Martin North said.
"We are going to see a lot of people who get unemployed but can't get re-employed quickly and are going to have to make a hard decision about whether they sell their property."
Fujitsu is forecasting unemployment to rise to 5 per cent by July and 7 per cent by the end of 2009, figures North described as "middle of the road" among forecasters.
Property values in turn were likely to fall because of the larger numbers of people who were forced to put their houses on the market, North said.
That had already happened on the Gold Coast as many people involved in the tourism industry became redundant and unable to find new work.
The number of households facing mortgage stress fell 6 per cent to 635,000 in January, from December 2008. The figure had come down from the peak of 883,000 in August.
The Reserve Bank of Australia had reduced the cash rate to 4.25 per cent, from 7.25 per cent, between September and December, while petrol prices also fell as the price of oil plunged during the second half of 2008.
Both of those things had reduced the cost of living significantly for mortgage holders, North said.
"The problem we've got now is that we've got another factor in the mix, and that factor is unemployment."
Fujitsu interviews 2000 households by phone each month and uses a rolling sample of 26,000, with the most recent respondents given a greater weighting in the study.
- AAP
