An Ipsos poll for bankruptcy specialist MNP Ltd has shown that 48% of Canadians have $200 or less of going bankrupt each month after meeting all obligations. The poll also revealed,
“35% of Canadians say an interest rate increase would move them towards bankruptcy, while 54% said they worry about their ability to repay debts.”
This is consistent with a ME Bank survey in Australia which found only 46% of households were able to save each month. Just 32% could raise $3000 in an emergency and 50% aren’t confident of meeting their obligations if unemployed for three months.
According to Digital Finance Analytics, “there are around 650,000 households in Australia experiencing some form of mortgage stress. If rates were to rise 150 basis points the number of Australians in mortgage stress would rise to approximately 930,000 and if rates rose 300 basis points the number would rise to 1.1 million – or more than a third of all mortgages. A 300 basis point rise would take the cash rate to 4.5 per cent, still lower than the 4.75 per cent for most of 2011.”
Do you know how many homes NAB has under repossession on its books at the latest filing? Around 277. Yes, Two hundred and seventy seven. Out of 100,000s of loans.
But we needn’t worry because we have to trust our central banks will keep rates low to avoid any economic shock. Remember the current and previous US Fed Chairmen have all but guaranteed there will be no more financial crises in their life time. Either they don’t hold much prospect for their longevity or they are clutching at straws.