You would have seen all the case studies on the teevs last night and in the papers today about mortgage payers feeling the pinch after yesterday’s rate rise. But are they the only ones who suffer?
David Imber, Policy Office of the Tenants Union of Victoria, tells Crikey:
There are only slightly more people with mortgages than there are renters – about 35 per cent compared to about 30 per cent – yet all the attention goes on the group who are better off and who despite the rise still benefit from the extensive tax and other benefits associated with home ownership
An exclusive focus on those with mortgages (and their legitimate personal financial pressures) turns some of the economy’s winners into losers deserving of our sorrow and concern. Unfortunately this leads to bad policy decisions as their problems receive the political attention, which is often nothing more than middle or upper class welfare rather than welfare that’s actually directed to those who on objective criteria are in need.
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The reality is that for years many renters have been doing it tough – in 2004/5 nine per cent of Commonwealth Rent Assistance recipients spent 50 per cent or more of their income on rent despite receiving the maximum level of benefit. That’s 85,500 recipients doing it very tough.
Many tenants will suffer as a result of this rise as many investors pass on the cost through increased rents (which we’ve been seeing for a few months now), or through an increase in investors being unable to pay their mortgages and the resulting eviction of their tenants by their financial institution (again we’ve seen a rise in these evictions over recent months).
Ironically some people who’ll be painted as losers because of the rate rise won’t actually feel it. Their tenants will.