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The average new owner-occupier mortgage has hit $626,055; a record high, according to RateCity. This is 0.04 per cent ($264) more than the month prior and 2.4 per cent ($14,901) higher than the RBA began rate hikes in April 2022.
Broken down state by state, the average mortgages were recorded as:
- NSW ($767,584)
- ACT ($614,242)
- Victoria ($601,891)
- Queensland ($586,627)
- South Australia ($541,775)
- Western Australia ($538,860)
- Tasmania ($462,324)
- Northern Territory ($437,427)
Compounding borrowers’ stress of the need for bigger mortgages is a drop in borrowing capacity, said RateCity research director Sally Tindall.
“Australia’s Teflon property market continues to rise, dragging the average new loan size along for the ride, despite the rate hikes,” she said.
“Over the last two years, buyers have seen their maximum borrowing capacity plummet, in some cases by hundreds of thousands of dollars, as a result of the RBA hikes, and yet the average new loan size has hit a new record high.”
Despite the cash rate at a “12 year high”, borrowers are still taking out mortgages larger than ever.
“It’s astounding to think owner-occupiers are, on average, taking out larger loans than ever before despite the fact the cash rate is sitting at a 12-year high,” said Tindall.
“Currently, the average new owner-occupier rate is 6.27 per cent – a difficult benchmark to clear. What’s even more staggering is that these borrowers are passing the banks’ stress tests at an average rate of 9.27 per cent.”
Of each of the states, Queensland, South Australia, and Western Australia have all reported record highs. NSW remains the state with the largest average mortgage cost, however, it is still 2.3 per cent lower (or $18,4541) than the time of the April 2022 RBA cash rate.
The only state to see a decrease was Victoria, with the monthly average mortgage falling by 1 per cent (or $6,291). This is 5.6 per cent (or $35,377) lower than it was at the time of the April 2022 rate.
“The average new loan size for owner-occupiers hit record highs in the states of Queensland, South Australia and Western Australia, where property prices are now at their peak in their respective capital cities,” said Tindall.
“The average new loan size in NSW, however, is still below the peak recorded in January 2022, despite the fact Sydney property prices have just hit a new record high, as borrowers presumably come to the table with bigger deposits.”
Leaving readers with some words of wisdom, Tindall said: “If you’re thinking about taking out a new mortgage, make sure you factor in the possibility of further rate hikes and don’t even entertain the idea of rate cuts when doing these calculations. A mortgage is for up to 30 years – that’s a long time to be living off bread and water for someone who’s overstretched the budget at an overheated auction.”
[Related: Home loan values record strong yearly growth: ABS]
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