Soaring house prices leave mortgages exposed
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.
AUTHOR
Nicholas O'Donoghue
Recommended for you
BT is to launch a new low-cost “Focus” investment menu for its Panorama platform this October, in partnership with Vanguard, seeking to compete with industry superannuation funds.
Net gains of financial advisers have already doubled since the start of FY25, according to this week’s Padua Wealth Data, with momentum gathering pace far faster than the previous financial year.
National advice firm MiQ Private Wealth has appointed a new chief executive to lead the business through a “transformative era” after penning a partnership deal with AZ NGA earlier this month.
WT Financial’s managing director, Keith Cullen, believes the firm’s Hubco model with Merchant Wealth Partners will be a “repeatable growth model” for the business as it scales its adviser numbers.
