What is the Current Average Home Loan in Australia?

If you’re in the market for a new home, you might be interested in seeing what the typical home loan is right now. Here, we look at the most recent numbers regarding new house loans in Australia and the monthly repayments for such a loan.

How Do Mortgage Brokers Estimate the Average Home Loan in Australia?

The Australian Bureau of Statistics (ABS) regularly releases information on new home loans from all Australian states and territories. Mortgage brokers typically use these publicly available statistics to compute the average home loan for a newly built house and how those values may have evolved over time.

The major data mortgage brokers and finance brokers look at here are new loans (not refinances) for owner-occupiers who are either purchasing an existing house (one that someone else has already lived in), purchasing a freshly built home, or constructing a new home.

Mortgage brokers utilise raw data rather than seasonally adjusted estimates to remove the estimated impacts of any regular seasonal volatility. Without further ado…

According to the Australian Bureau of Statistics (ABS) data, a total of 34,361 new loan commitments were given in September 2021 for persons buying a home to live in, excluding loans for land or home modifications, for a total value of around $19.7 billion nationally. This is a 4.2 per cent decline from the previous month in the number of new loan commitments!

In September 2021, the average new loan in Australia for consumers buying existing homes was $590,026, up 1.6 per cent from the previous month.

The average loan amount for a freshly built house was $550,647, a 0.3 per cent decrease from the previous month, and $499,401 for a loan to build a new home, a 3.3 per cent increase.

However, the size of a mortgage is heavily influenced by a property’s location, as this figure fluctuates significantly from state to state and even from suburb to suburb!

The Average Mortgage in Each Australian State

Not all Australian states are on the same footing when it comes to mortgage sizes. Since Sydney and Melbourne are Australia’s major cities, the Victorian and New South Wales states have the greatest mortgage sizes.

Due to its increasing housing prices, Sydney raises the state average, and Melbourne isn’t far behind. According to Australian mortgage brokers, the less populated areas of Australia are more inexpensive; however, prices have crept up during the 2020-21 boom.

In September, the Northern Territory had the smallest average house loan size in the country for an existing property, at $400,952. New South Wales had the highest, at $772,025.

The average house loan for a newly constructed home was $337,143 in Tasmania and $692,378 in New South Wales.

The Northern Territory had the lowest average house loan for a new build, at $372,222, while the ACT had the most, at $673,000.

How Have Home Loans Evolved in The Last Year?

The national average new house loan across all categories fell early but then climbed as 2021 proceeded.

Nationally, the average home loan for existing homes fell to $580,895 in August 2021, from a year-high of $593,604 in July, but it rose to $590,026, the second-highest of the year so far, in September.

Despite a minor decrease in new buildings in May and a 12-month low in new constructions in January, average new home loans for new builds and new constructions have continued to grow this year.

The average new house loan for newly constructed buildings has remained stable, although loans for new constructions have increased, which remains the lowest credit choice nationally.

What is the Typical Loan Amount for First-Time Home Buyers?

According to Finder.com.au, the average loan amount for first-time home purchasers was $451,002 in May 2021, representing an approximately 16 per cent rise since 2019. This figure is a decent indicator of what first-time homebuyers can afford throughout the country, but everyone’s loan size should be a personal decision based on their financial position. Finally, when it comes to your mortgage, you don’t want to bite off more than you can chew since this might lead to financial issues and worry in the future.

How Much Should Mortgage Payments Be in Terms of a Percentage of Income?

The amount of revenue allocated towards your mortgage is determined by the size of your loan, your budget, interest rates, your income, and other factors.

However, the usual guideline mortgage brokers recommend is that your mortgage should consume up to 28 per cent of your income. Anything exceeding that level may make the ordinary earner’s financial condition unpleasant.

Although this is only a general guideline, your financial situation may allow for a higher or lower proportion. So, before determining how much to borrow and how much you can spend on repayments, make a careful budget, and get competent financial counsel from reputable mortgage brokers!

What Happens if my Monthly Mortgage Payments Exceed 28% of my Monthly Income?

As a general guideline, if your mortgage payments exceed 28 per cent of your monthly income, you may be vulnerable to mortgage stress. After this proportion, the ordinary household will find it challenging to keep up with their repayments, much alone other household costs.

Furthermore, Australians under mortgage stress are more likely to struggle if interest rates rise—all in all, a complicated situation. Even if a household can afford this amount of mortgage repayment, increasing interest rates or unexpected misfortunes may cause them to feel the strain.

Expert finance brokers believe that interest rates will climb in the future months or years, despite the fact that they are now at record lows. Mortgage holders are urged not to get complacent and to take efforts to build a financial buffer to handle higher mortgage payments, whether through refinancing or budgeting.

In addition to finding everyday Australians the best deals on their home loans, mortgage brokers can also help their clients with a plethora of financial advice, including budgeting, refinancing and investment opportunities.

It’s important to note that there is no one-size-fits-all solution for finding “the best home loan”.It’s only a matter of finding the ideal loan for your unique needs.

Financing, however, does not have to be a complex procedure if you enlist the assistance of a reliable finance broker! As interest rates on your mortgage and home loan vary, your mortgage broker will take the time to understand your goals and circumstances.

How Long Does It Take to Pay Off a Mortgage?

There is no set period in which you must pay off your mortgage. The average loan duration ranges from 10 to 30 years, with most borrowers choosing 30 years. If your loan enables additional repayments, you may be able to pay off your loan faster; but, be prepared to pay exit and early termination costs.

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