Nearly six million Australians with a mortgage are struggling with their repayments, but many are hesitant to ask their bank or other lenders for help.
Over the past 12 months, 47 per cent of Australian adults (the equivalent of 5.8 million people) with a debt have struggled with their repayments, according to research conducted by the Australian Securities and Investments Commission (ASIC).
In addition, 41 per cent of Australians with personal loans/debt anticipate difficulty with making their repayments in the next 12 months.
Cost of living pressures, reduced income and unexpected expenses have been cited as the predominant causes behind this hardship.
Refusing to seek help for financial hardship
However, despite this struggle, three in 10 Australians (30 per cent) under mortgage stress do not want to ask for financial hardship assistance.
According to the survey, 42 per cent of respondents say they would rather sell their belongings and assets and 40 per cent would prefer to take up a second job before applying for help with their bank or other lender.
Of these, 50 per cent of borrowers worry it will cost them more in the long run, 32 per cent fear it will negatively impact their credit scores and 31 per cent don't think their lender would do much to help.
Over half the respondents (55 per cent) were not even aware that such help was available.
"For many Australians, the path to seeking help feels daunting, confusing, and challenging. It is concerning that people would rather sell their personal belongings or get a second job rather than seek financial hardship assistance," ASIC commissioner Alan Kirkland said.
Emotional barriers pushing financial limits
The survey indicates that it's not only a lack of awareness, but also some emotional barriers that are making Australians hesitant to ask for help when they really need it.
Benefits of asking for help
Apart from potentially reducing financial pressure, there are significant other benefits related to seeking to financial hardship assistance from lenders.
Improvement in mental health, sleep and general well-being have been recorded as some additional positive impacts by those who have sought this help.
However, that number is not very high.
According to the ASIC, only 20 per cent of those surveyed said they had sought financial hardship assistance at some point.
Two-thirds (65 per cent) of those say they felt a positive change after they sought this help.
Highlighting the importance of seeking financial hardship assistance when needed, Kirkland explained how lenders are bound by the law to help their stressed borrowers.
"Customers in hardship are entitled under the law to request assistance. These findings should be top of mind for lenders when supporting Australians in financial hardship," he said.
"The message for Australians experiencing financial stress is that banks or lenders have a responsibility to support customers. If you are worried about being able to make your repayments, you’re entitled to ask your bank or lender for help.
"If you aren’t happy with your bank or lender’s response, make a complaint and, if that doesn’t resolve the issue, contact the Australian Financial Complaints Authority."
Where you can look for help
ASIC’s financial literacy program, Moneysmart, is launching a new awareness campaign for Australians, Just Ask! Hardship Help is available.
"Australians facing financial hardship should reach out to their bank or lender and 'Just Ask' for help. Seeking financial hardship assistance is a right, and lenders are required to respond to every request for hardship assistance," Kirkland said.
Moneysmart provides free and on seeking financial hardship.
