Property owners in capital cities are on the tipping point of mortgage stress despite the low interest rates, with households falling just within the industry’s recommended maximum proportion of income to repayments, new research reveals.
A survey of more than 1,100 Australians, conducted by comparison website finder.com.au, found that 29% of household incomes being used to cover mortgage repayments. The industry’s recommended maximum proportion of income required to meet repayments is below 30%.
The survey also found that first home buyers are more likely to experience mortgage stress than seasoned property buyers, with, on average, 30% of their incomes going towards mortgage repayments. In comparison, those city dwellers who have bought a property that is not their first home within the last three years, spend on average 25% of their income on mortgage repayments.
Those who are buying with a family member or friend are also more likely to experience mortgage stress, with an average of 35% of their income being used towards mortgage repayments. Singles, or those buying on their own, are also experiencing mortgage stress with an average of 32% of their income being used for repayments.
Those who decide to buy property with their partner are the most likely to come in below the mortgage stress threshold, with an average of 26% of their income being used towards mortgage repayments.
The most at risk group are city dwellers with a household income of $75,000 or less, who spend an average of 38% of their income to make their mortgage repayments.
Across the states, mortgage holders in Adelaide seem to have fallen most deeply into the trap compared to other cities, with an average of 34% of their incomes contributing to mortgage repayments. Brisbane city dwellers are also in mortgage stress dedicating 31% of their incomes to mortgage repayments. This is followed by Perth (29%), Melbourne (28%) and Sydney (26%).
