Mortgage repayments are now taking an even bigger slice of Australian household income thanks to the recent interest rate hike and rise in property prices.
According to the Real Estate Institute of Australia/Deposit Power report the proportion of income required to meet loan repayments has increased nationally from 30.7% in the December 2009 quarter to 32.6% in the three months to March 2010.
Affordability has declined nationally, with the greatest decrease evident in Tasmania, which is down 3.8%. Queensland was just behind Tasmania with a decrease of 3.4%. Buyers in New South Wales are hardest hit with the proportion of income required to meet loan repayments now at 34.5%.
The Australian Capital Territory remained the most affordable state or territory in which to own a home according to the report. The proportion of income required to meet loan repayments increased 0.2 percentage points to 17.9% which is 14.7% below the national average.
David Airey, President of REIA said that interest rates are contributing to the decline in housing affordability. Such an increase may spell bad news for new buyers wishing to enter the property market.
“It has now been 12 months since we have seen any improvement in housing affordability,” he said. “In March 2009 the proportion of income required to meet loan repayments was 28.8%. Nationally, the average Australian household is now spending an extra $143 per month on their mortgage compared to the previous quarter.”
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan