“Surveys conducted indicate that some 30 per cent of Filipinos in Australiaown 1 or 2 investment properties,” said Neil Galang, a known home loan broker in Sydney. He added that “the average home loan of the Filipino Australian is around $300,000.” The recent interest rate hike announced by the Federal Reserve Bank has prompted home loan providers to jack up their lending rates in order to preserve their profit margins. At least one bank went up by more than the .25% rate hike enforced by the Reserve Bank. Most people know which bank did this.
Given this scenario, the Filipino home investor faces a bleak future. Many have over-committed their budget when they bought investment properties. “They just went overboard by buying beyond their means,” said Galang. “A comfortable situation is when no more than 35 per cent of total family income is allocated for home loan repayment,” added Mr. Galang. But such is not always the case. In his effort to maximise his quest for wealth, many Filipinos have ventured into the property market. But over the past few months, property value has dropped by at least $20,000. Some have gone down by as much as $60,000. A 4-bedroom house in the west that had a market value of $500,000 is now selling for only $440,000.
Coupled with the loss in market value of real estate is the increase in the cost of prime commodities. Three litres of milk now costs $3.19 whereas in the not so distant past, it used to be $2.99. A kilo of chicken wings used to be $1.99. It now sells at $3.69 at Woolworths in Glenwood and in many other areas. The spiralling cost of petrol has added to the pain of home investors, many of whom are now compelled to sell their properties to cope with inflation.
What hurts is the fact that most lenders don’t really care. They know that the loan is fully secured. When the borrower becomes in arrears, lending institutions can always initiate foreclosure proceedings, sell the property and get their money back. According to Galang, most lenders execute a Writ of Possession when the borrower becomes 90 days overdue.
Mr. Galang quoted Federal Treasurer Wayne Swan to have said that “repossessions in New South Wales have risen to as much as 60 per cent compared to previous year.” An active member and staunch supporter of the Labor Party, Neil Galang said that this situation was inherited from the previous administration.
“Things are tough but there is hope and there will always be a solution,” Galang said. People need to make hard decisions. He recommends debt consolidation which means paying only one loan. “Going on a strict budget may be the best defence to protect our Australian dream home.”