This is the second and final report on the problem of mortgage default in Australia. An earlier positioning paper (Berry et al., 2009) presented, in detail, a range of issues, views, evidence and potential policy directions concerning this subject. Both reports are to be read as one.

The project has focused on the incidence, causes and impacts of the rising trend in mortgage arrears and defaults, apparent in Australia over the past few years. The outbreak of the ‘global financial crisis’ in the second half of 2008 (but the genesis of which was clearly present 18 months earlier) has given the project added currency and urgency. Governments at federal and state levels in Australia have and are addressing many of the issues raised by this study.

This report aims to do two things. First, we selectively bring up-to-date the accounts of trends and analysis presented in the earlier report. Second, providing the main focus of this report, we will present and analyse primary data gathered from a survey of defaulting mortgagors and a number of follow-up interviews, in order to better understand the factors mainly responsible for borrowers falling into mortgage repayment difficulties, the range of impacts on their lives and the clues all this might give for sensible policy development.

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