01 Oct Mortgage Strain Better Than 5yrs Ago
The proportion of income needed to service current household debt is lower than it was in 2011 because of historically low interest rates.
In Brisbane for example, 30% of a household’s income is required to service an 80% loan-to-value-ratio mortgage, compared to 40% five years ago.
Mortgage Choice chief executive John Flavell says: “So while property is certainly expensive and the level of household debt is high, it would seem many Australians are actually in a better position now than they were five years ago.”
The small percentage of borrowers falling behind with payments is mostly due to a change in personal circumstances, such as a relationship breakdown or job loss.
“That’s why people are falling behind in payments, not because they have been given access to credit they can’t afford,” he says.