Interest rates may be at historic lows but many buyers are still over committed and facing mortgage
2015-07-22LOW interest rates may be encouraging property buyers, but many now face mortgage stress with owners in one capital city doing it worse than any other.
When owners use 30 per cent of their income to repay their loans they are considered to be in mortgage stress.
Despite having lower property prices than many other capital cities, owners in Adelaide had the highest levels of mortgage stress of all the capital cities paying on average 34 per cent of their incomes on their loan.
Brisbane city owners were also in mortgage stress with 31 per cent of their incomes going to repayments.
Michelle Hutchison of finder.com.au said it was alarming that so many Australias were overstretching themselves even while interest rates were low. Source: Supplied
Despite high property prices the finder.com.au survey found Sydney owners were only committing 26 per cent of their income to mortgage repayments, while in Perth it was 29 per cent and Melbourne 28 per cent.
The survey found that first home buyers were on average spending 30 per cent of their incomes on their loan repayments.
Michelle Hutchison of finder.com.au said the results were a bit worrying.
“It’s alarming that so many Australians are overstretching themselves and first home buyers and those buying with others are the worst off,’’ she said.
She said the emerging trend of people buying with a family member or friend as an easier way to get into the property market didn’t appear to alleviate levels of mortgage stress for many.
Those buyers were more likely to experience stress, allocating about 35 per cent of their income to repay their loans.
The current average mortgage size is $334,000 but it is higher in capital cities by more than $71,000.
Mrs Hutchison said borrowers needed to keep in mind that interest rates would eventually rise again and if they were already close to mortgage stress, that situation could become worse.
“For those already borderline in mortgage stress, these higher mortgage repayments are likely to have an adverse affect on your lifestyle and flexibility,’’ she said.
Source:http://www.news.com.au/finance/real-estate/interest-rates-may-be-at-historic-lows-but-many-buyers-are-still-over-committed-and-facing-mortgage-stress/story-fncq3era-1227448787685
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