Mortgage repayment Affordability - Mortgage Domayne

Mortgage repayment Affordability

July 15, 2023

Welcome to the finance update for the week ending 15 July, 2023.

If you follow our social channels, you may have notriced that it’s been a big week for Mortgage Domayne with regards to industry recognition. At the start of the week, we were notified that Australian Finance Group had shortlisted four of our brokers in the category of Champion Broker for their upcoming Excellence Awards, in addition to Mortgage Domayne being shortlisted in the category of Champion Group.

Adding to that, on Wednesday it was announced by finance industry publication Mortgage Professionals Australia, that we have landed at number 15 nationally in their Top Brokerages rankings. We might allow ourselves to pop some bubbles this weekend to celebrate!

In this week’s newsletter, we take a look how many hours people are having to work in order to cover their mortgage repayments in the face of increasing interest rates.

Australian homeowners who are single are finding it increasingly challenging to afford their monthly mortgage repayments due to rising interest rates and the growing cost of living.

According to research conducted by Canstar, an average Australian with a $584,836 loan and a $72,000 salary would need to work approximately 135 hours each month, equivalent to 3.6 weeks, to cover a monthly repayment of $3,883.

Homeowners with dual incomes have a more favourable situation, as they only need to work around 67 hours, or less than two weeks per person per month, to meet the same repayment amount.

The research highlights that single homeowners are particularly affected by interest rate increases by the RBA, with rates rising up to 4.1 percent.

In addition to mortgage repayments, single-income households face difficulties with other essential expenses. For instance, the average monthly grocery bill of $659 requires three days of work in a month to cover the cost. Similarly, electricity bills amounting to $162 necessitate nearly six hours of work for single-income homeowners.

The impact of these financial pressures varies depending on the state of residence, as average loan sizes and incomes differ across borders.

In New South Wales, homeowners with a mortgage of $720,458 and a before-tax income of $75,000 must work 21 days per month to afford the $4,784 repayments.

In South Australia, where the average income is $65,000 and the average home loan is $467,471, homeowners need to work 15 days to cover the $3,104 repayments.

Similarly, in Victoria, homeowners with a loan of $599,398, an average income of $72,000, and a repayment of $3,980 need to work a minimum of 18 days each month.

In Queensland, homeowners earning around $69,000 and facing a $3,468 monthly repayment have to work approximately 16 days.

Finally, in Western Australia, homeowners with an income of $78,000 need to work 13 days each month to cover the $3,135 repayments.

Any changes in interest rates from last week are highlighted in orange.

Note – Increases announced by lenders as a result of RBA decisions normally take 1-2 weeks to come into affect.

Standard Variable

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.

1 Year Fixed

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.