Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

Soaring house prices leave mortgages exposed

financial-planning/mortgages/

21 March 2016
| By Nicholas |
image
image image
expand image

Mortgages are taking an increasingly dominant proportion of Australian home-owners' debt, as house prices continue to soar, research reveals.

Data from the Australian Prudential Regulation Authority (APRA) found that mortgages now account for close to 90 per cent of owner-occupier housing debt, compared to credit cards and personal loan debt.

Figures from APRA revealed that over the last 11 years the average housing debt of an Australian home-owner has more than doubled, with the after mortgage climbing to $372,400 in January from $189,300 in January 2004.

Comparison website, finder.com.au, consumer advocate, Bessie Hassan, warned that a decline in housing market could leave house-owners exposed to increased financial pressure.

"If there were falls in the housing market like some experts are predicting, it could have profound implications for mortgagees capacity to service their debt," she said.

"Australians are becoming more comfortable with housing debt than previous generations, as a result of skyrocketing property costs.

"These increasing prices have pushed up loan sizes, with the average national home loan size jumping from $189,300 in January 2004 to $372,400 this January, an increase of almost 100 per cent.

"This has grown much faster than inflation, which would have increased an asset by only about 34 per cent in the same period.

"Simply put, if you're serious about entering the property market, this is the predicament you face."

While the mortgage debt has almost doubled over the last 11 years, the APRA figures showed that credit card debt was relatively stable, climbing from $4,999 in December 2004 to $5,885 at the end of 2015.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

The succession dilemma is more than just a matter of commitments.This isn’t simply about younger vs. older advisers. It’...

5 days 11 hours ago

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

4 weeks 2 days ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

1 month ago

ASIC has released the results of the latest adviser exam, with August’s pass mark improving on the sitting from a year ago. ...

1 week 1 day ago

The inquiry into the collapse of Dixon Advisory and broader wealth management companies by the Senate economics references committee will not be re-adopted. ...

2 weeks 1 day ago

While the profession continues to see consolidation at the top, Adviser Ratings has compared the business models of Insignia and Entireti and how they are shaping the pro...

2 weeks 3 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND