Aussies putting 37% of income towards mortgage repayments: REIA

Woman watching television at home.
Photo by Roberto Nickson on Unsplash

Housing affordability in Australia continued to worsen over the December quarter, with recent research putting the proportion of income required to meet home loan repayments at 37 per cent.

Data from the Real Estate Institute of Australia (REIA) showed housing affordability declined across most states and territories, ranging from a 0.1 per cent drop in Western Australia to a 5.9 per cent drop in New South Wales.

In New South Wales, residents were directing the highest proportion of household income (46.5 per cent) towards their mortgage.

Meanwhile, Victorian households needed to set aside 37.3 per cent of their income to make repayments each month.

Across all buyer types, the average loan amount rose to $590,482 — an increase of 3.5 per cent over the quarter and 17.7 per cent over the past 12 months. 

REIA president Hayden Groves said this was the largest annual increase recorded since the Housing Affordability Report began in 2002.

He noted that borrowers’ capacity to service a mortgage could worsen as interest rates rise in the coming months and called on the government to combat surging property prices by boosting supply.

"We are urging governments to get on the front foot with this issue by prioritising housing supply shortages which is the most effective way of getting affordability under control," he said. 

RELATED: 5 things you should know about the Australian property market in 2022

For first home buyers, who tend to set their sights on more affordable properties, the average loan size increased to $470,548 — 2.5 per cent higher than the previous quarter and 12.9 per cent higher than this time last year.

While the property market has lost some steam as of late (with prices rising by just 0.6 per cent over February according to CoreLogic), it’s still sitting pretty after capital city home values surged more than 25 per cent over 2021. 

That news will be well-received by current homeowners, but it’s less likely to be appreciated by younger Australians hoping to take their first steps on the property ladder.

Recent data from the Australian Bureau of Statistics (ABS) suggests that fatigue among first home buyers is starting to set in, with the number of new owner occupier loans to first home buyers falling by 32.6 per cent in the 12 months to January 2022.

For more information on mortgage and lending trends, visit our home loans statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 472 home loans.
Last updated 25 June 2024 Important disclosures and comparison rate warning*
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Compare
    Details
  • Discount Great Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%, over $150k

    interest rate
    comparison rate
    Initial monthly repayment
    6.19% p.a. variable
    6.21% p.a.

    An easy to use Home Loan with no establishment fee and no monthly or annual fees. Minimum deposit of 20% is required. Mozo Experts Choice Awards - Investor Home Loan Award 2024^.

    Compare
    Details
  • Variable Home Loan 90

    Principal and Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.04% p.a. variable
    6.06% p.a.

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

    Compare
    Details
  • The Better Home Loan Special Offer

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.14% p.a.

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

    Compare
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.