Middle-class homeowners are joining the growing calls for financial help

Claire Tacon, Deputy Head of Financial Advice for the Consumer Action Law Centre, said people turning to the service for advice are no longer limited to Centrelink services.

“It seems to be a larger cross-section of the community that is contacting us,” she said. “It’s people who are working and unable to meet all their financial obligations. They tend to be middle-class callers.”

Financial advisors have received more referrals from Lifeline than Tacon has seen in her eight years with the ministry.

“The psychological problems are linked to the financial stress. Lifeline talks them down from the ledge and refers them to us,” she said.

“We get a lot of suicidal callers. We’re routing through to Lifeline. It goes both ways.”

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Tacon’s clients include a 39-year-old father of four young children who was unable to pay his final mortgage and tax bills, which are now overdue. His mortgage payments are more than $920 a week, leaving him $580 to support the family and pay the bills from his $1500 weekly income. His mortgage rate was about 2 percent when he borrowed more than $650,000 for the family home four years ago. Now it’s more than five and a half percent.

Lee, who has a job as a construction manager in Melbourne and has worked in the industry for more than 20 years, did not want his last name published to avoid embarrassment.

“I don’t want my kids to look like they’re poor and can’t do things,” he said. “But the bills keep coming.”

He also has a car loan, a credit card that’s maxed out at the $2,000 limit, and he’s stopped sending his four children, ages 3, 5, 8, and 9, to swim lessons. He’s stressed about raising $34 by next week to send two of them on a school field trip.

His family recently missed his father’s 65th birthday party because the cost of eating at the restaurant was too high. His children had also missed going to friends’ birthday parties because they couldn’t afford to buy them presents.

As the Reserve Bank forecasts about 800,000 fixed-rate home loans will be converted back to variable rates this year, Tacon says the bank’s 10th consecutive hike in the past week has caused homeowners to panic about how they’re managing their budgets should manage and didn’t know what options they had. “They think if they can’t keep up with the payments they will lose their home and they’re too scared to talk to the bank,” she said.

“You can apply for a holiday on repayments or take out an interest-free loan or extend the term of the loan. They can ask for whatever they need to fulfill their commitments,” she said.

Stephanie Boag, chief executive of NAB Assist, said the bank’s emergency assistance is available to customers with financial difficulties. The Bank’s latest hardship survey shows that four in ten Australians are experiencing some form of financial difficulty.

“Sometimes in severe cases we have imposed moratoria on their payments for a period of time,” Boag said. Other options included a rate cut or paying interest instead of principal and interest.

“Customers selling their home are the very last resort and there are many steps involved up to that point.”

Crisis help is available at lifeline on 11/13/14 and out of Beyond Blue on 1300 22 4636.

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