Mortgage payments consume about 17% of borrowers’ incomes

By Michael Mata
According to new data from Deutsche Bank, despite recent interest rate increases, Aussie homeowners are spending the same proportion of their incomes on mortgage payments as they did in the past. Mortgage payments consume approximately 17% of borrowers’ incomes, in line with the average since the late 1980s.

In contrast, borrowers in Sydney and Melbourne are spending a larger chunk of their weekly earnings on mortgage payments as wages have failed to keep up with surging house prices, leading to possible mortgage stress if interest rates rise.

Deutsche Bank’s analysis highlighted the differences across Australia, with borrowers in Sydney spending 63.6% of their weekly income and borrowers in Melbourne spending 45.8% of their weekly income on mortgage payments - both higher than the historic average.
In Brisbane and Perth, this proportion is 31.3% and 27.3% respectively, both below the average since the mid-90s.    

Renters, on the other hand, are spending 13.5% of their income on housing, which is above the historic average of roughly 12.8%.

The national average is from the Australian Bureau of Statistics (ABS) and the Reserve Bank of Australia (RBA), while the findings on cities is based on Deutsche Bank’s own modelling of various inputs such as house prices, average weekly incomes, and standard variable mortgage rates.

Other estimates indicate that the national average is higher at about 30% of monthly income.