By September this year, it’s said that nearly one million households in Australia will be under some form of mortgage stress.

This statement is shocking to say the least, but it’s important to examine the reasons for this increase with the hope that it can raise awareness.

Over time, the causes of mortgage stress change to reflect socio-economic conditions such as interest rate rises and increased petrol costs.

But what is the real social cost of mortgage stress? The answer lies in the affect it has on relationships. The statistics clearly identify the fact mortgage stress equals greater chance of divorce.

As mortgage stress takes hold, relationships become strained with a large percentage of them ultimately breaking down.

Needless to say this has a flow on effect.

Common household costs (phone, utilities etc) that were once shared, increase significantly. When this happens, in the absence of increased wages, people rely heavily of credit cards and unsecured borrowings to bridge the gap between what they earn and the cost of living. This situation is a recipe for disaster and can spell financial ruin.

Consider the situation where an individuals Centrelink payment decreases on the loss of a partner, where other costs remain the same or increase (such as higher rentals, petrol, food etc).

When mortgage stress takes hold and the relationship breaks down, what happens to the mortgage? Does one person take over the mortgage or do they sell up? With property valuations hitting an all time low, more and more people are finding themselves in a position where they have to sell, in contrast to a few years ago, this was a little different.

In the above examples, it’s easily illustrated the flow on effect mortgage stress and for that matter debt has and how it can perpetuate, adding to debt levels.

We are told that interest rates increase to curb inflationary pressures and drive down consumption, but when retailers are crying out that sales are down, it seems like a confusing paradox. Personal debt levels are up (credit cards etc) but where are people spending the money? Is it going on plasma TV’s or are people relying on credit cards to pay for essential costs because of increased petrol prices, increased food costs, higher rents and lower household incomes?

From my perspective, I tend to believe its probably a combination of the two.

If you are struggling, you should seek help immediately. Always speak with a trusted, qualified source and gather as much information as you can before setting about a course of action.