2 minute Read
2 minute Read
The property market is going through a boom phase, which means housing affordability is getting tougher. So how much does the average Australian household need to put towards their monthly home loan repayments in the current market? Let’s take a look.
You’ve probably noticed the housing market is going a bit crazy at the moment.
FOMO has taken hold and many properties across the country are selling well above their reserve.
As such, housing affordability has deteriorated, says Moody’s Investor Service, reversing the improving trend seen in 2020 during the peak of the coronavirus crisis.
On average, two-income households need to put aside a quarter (24.6%) of their monthly income to meet repayments on a new home loan, as of February 2021.
That’s up from 22.7% in June and July 2020, when new mortgages were the most affordable they’ve been in a decade.
The deterioration in housing affordability was evident in all capital cities over the five months to February 2021, with Perth remaining the most affordable and Sydney the least.
That said, housing affordability still remains better than the ten-year average of 26.1% and well under its peak of 30.7% in April 2011.
That’s because the average mortgage interest rate has nearly halved to 3.65% since 2011, according to Moody’s.
Got your eye on an exciting new property and want to know if you can get a loan for it?
Get in touch today and we’ll help you crunch the numbers, work out your borrowing capacity, and discuss your finance options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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