Less income being spent on home loans than a decade ago
Australians are spending a smaller portion of their income on their home loans than a decade ago, according to the latest figures from the Australian Bureau of Statistics.
In 2005-06 owners with a mortgage were directing on average 19 per cent of their total household income towards housing costs. But by 2015-16, this had fallen to 16 per cent. Housing costs include mortgage, water and rate payments.
The reasons for the reduction have been attributed to lower interest rates and growth in household incomes over the past 10 years. In 2005-06, homeowners with a mortgage paid $434 a week in housing costs, which is similar to the $452 (adjusted for inflation) paid in 2015-16. However, over the same period, the average total household income for mortgagees rose from $2272 to $2759 a week.
Commenting in The Age, Dean Adams, the ABS director of household characteristics and social reporting, says the burden imposed on mortgagee households might even be lower than the survey suggested.
“Our survey measures what they chose to pay in mortgage costs, not what they had to pay,” he said. “As rates have come down, some will have spent more than they need to in order to get ahead on their loans.”
The ABS figures show that Canberra is the easiest city in which to pay off a mortgage, with monthly payments of 15 per cent of income. Sydney and Hobart have monthly payments of 17 per cent, and Melbourne, Brisbane, Adelaide and Perth have monthly payments of 16 per cent.