According to the report, death, divorce, and desperate vendors are just some of the reasons why such properties exist. Brisbane's Gold Coast remains to be the nation's hotspot for distressed sales, but they can also be found in mining town properties.
According to financial sector regulator ASIC, missing mortgage repayments can happen to anyone, especially in sectors like mining and media, which are both facing rising unemployment.
However, property repossessed by lenders is just one per cent of the total default figures reported by banks in their annual results. Lenders are generally reluctant to repossess properties because of the legal and administrative costs, as well as potential bad publicity.
"We have sound lending practices," said a spokeswoman for Westpac Groups. "We only consider repossession as a last resort."
Westpac and other major lenders have implemented several strategies to assist customers with financial problems, like extending the loan term, allowing a short-term moratorium on repayments, or deferral of payment.
ASIC also advises borrowers to avoid borrowing more money from friends and family or using credit cards, which usually have much higher interest rates. Refinancing, consolidating debt, or switching home loans can also add more costs.
"It is stressful and embarrassing to talk with a lender but taking action quickly means you can stop a small problem from becoming a big one," said an ASIC spokesman.
Collections: Mortgage News