The Deposit Power/REIA Home Loan Affordability report for the September quarter found that Australian families now need more than a third (33.8%) of family income to pay an average home loan. Graham Joyce, president of REIA calls it the 'worst' result for 25 years, except for the 18-month period from March 1989 to September 1990. "Three interest rate rises in a year have been extremely bad news for homebuyers, and particularly first home buyers," said Joyce. "First home buyers are being locked into the rental market due to deteriorating home loan affordability." Joyce said that the results in this report reflect only two of those rises. "We can expect to see a further deterioration recorded in the December quarter." Families living in NSW were the hardest hit with 36.4% of family income required to service an average mortgage repayments. Queensland householders now need 34.9% of the family income to repay their loans, while families in Tasmania would need 33.3% of their family income to meet average loan repayments. Housing affordability in that state is now at its lowest point since March 1990. The grim outlook is echoed in a separate report issued by ANZ. The bank's Australian Property Outlook reported that while household income growth has been strong, housing affordability has been squeezed by a combination of rising house prices and more recently, higher interest rates. "In most state capitals, housing affordability has plummeted to lows not seen since the late 1980s when mortgage interest rates were 17%," wrote Ange Montalti, senior economist, financial systems analysis with ANZ.