When home loans become a burden

Home loans are becoming more of a burden for Australians as many grapple with indebtedness.

More than half of Australians (56%) who are paying off a mortgage or have paid off a mortgage said their home loan is/was a burden and somewhat limited their lifestyle, a survey by Gateway Credit Union shows. 

On the other hand, 44% said their home loan is/was a benefit and somewhat assisted their lifestyle. 

This could be indicative of a broader problem, said Gateway CEO, Paul Thomas.

“We know Australians are heavily indebted, the latest figures from the Australian Bureau of Statistics (ABS) found that around three-in-ten households (29%) were classified as ‘over-indebted’. In fact, the ABS research also revealed owners with a mortgage were the most likely households to be over-indebted (47%),” he said.

The research shows that Australians are more likely to feel their home loan is a burden today than two years ago. 

In 2015, 45% of mortgage holders said their home loan was at least somewhat of a benefit. This proportion went down to 40% by 2017.

“It would seem Australians still want to achieve the dream of owning their own property, even at the expense of financial stress. As a result, their home loan becomes a pain-point rather than an advantage,” said Thomas.

Factors such as increased property price across all capital cities and record low wage growth seem to contribute to Australians’ dissatisfaction with the cost of home ownership, he said. 

Looking at major states, home owners in VIC (59%) and NSW (56%) are more likely to consider their home loans to be a burden compared to those in QLD (47%), the survey shows.

Thomas does not find it surprising that many Australians see paying off their homes as an encumbrance. 

“It’s one of the biggest financial decisions you will make in life, so borrowers need to do their due diligence before buying a property. There are many advantages to owning your own home and while a mortgage is considered ‘good’ debt, borrowers need to make sure they’re not over-stretching themselves and taking on more than they can handle.”

Gateway’s Mortgage Holders Sentiment Report surveyed 1,030 respondents and compared the latest 2017 results with the 2015 figures.


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