Is Mortgage Stress on The Rise?


Is Mortgage Stress on The Rise?

Mortgage stress is when we are spending more than 30% of our pre-tax income on mortgage repayments. With property prices across Australia continuing their climb and an average growth forecast for the year sitting at 19%, many will find themselves with greater mortgages. Although interest rates will help offset repayments, we will still find ourselves having larger debt and higher mortgages.

A pay rise might be overdue for most! Here are some figures to highlight how this might look. In Sydney, the median house price from start to end of the year will change from $1,309,195 to $1,441,671. More locally in Brisbane, with a 16% forecast price rise, median prices will sit around $715,000. For Sydney-siders monthly repayments would sit around $4,794 while in Brisbane it would look like monthly repayments of $2,377. For the average person earning an annual income of $57,720 or for full-time employees earning an annual income of $76,067 one could only imagine there would be little left for other necessities and those more desired luxuries.

Wage increases from $90,000 to just over $100,000 for Brisbane folk would keep many from falling into mortgage stress and in Sydney, you’re looking at an increase to over $200,000 per year in annual income. It doesn’t appear that we will see a significant wage increase any time soon (refer to my blog – Inflation, Wages and The Cost of Living) meaning that we will likely see fewer people being able to afford to purchase a home.

The Sunshine Coasts median house price is said to currently sit at $630,000 however I think this would more realistically be higher than that considering the bumper starts to the year property price growth has had. For the average loan repayments on a principal plus interest loan of 2.2% mortgage repayments would be $2,272 (95%) to $1,913 (80%).

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