In the grip of mortgage madness
Young Aucklanders are signing up for mortgages of up to $1 million, sparking fears an entire generation could be heading for a cash crisis.
Thursday, May 19th 2005, 7:07AM
by The Landlord
With the median price for a house in Auckland now at $372,000 - a rise of 16 per cent in the past year - many young couples are being saddled with massive loans they can barely afford, say experts.Given many are either unable or unwilling to save for their retirement as well, they could be headed for a miserable old age.
Jeff Matthews, senior adviser for Spicers Portfolio Management, said he knew of two Auckland couples with mortgages of over $900,000 - one of which was over a single property. Although their income was substantial, they were paying "absolutely horrendous" amounts of interest.
"It's like we've lost touch with the reality of what can go wrong."
Mr Matthews said a reality check was needed by encouraging people to save money from an early age, to have larger deposits, and to take on smaller mortgages.
"All it would take is for someone to lose their job, get sick, have another baby and suddenly they have a problem."
Mortgage brokers say million-dollar loans are becoming less rare as the Auckland property market continues to defy predictions it has hit its peak.
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