How much more debt is being taken on in 2014 compared to 2013? Finder’s high risk warning
Comparison website Finder has put out a warning about high-risk home loans, after recording a jump in interest-only home loans and larger loans across the board.
In fact, 81% more Australians were searching for interest-only loans compared to the same period last year, Finder recorded.
Over a third of home loans financed since the March quarter to June quarter 2014 were interest only, at 35%. This is the highest level since the data was collected, according to Finder’s money expert Michelle Hutchison, and loans are now at a record high of $319,000.
This puts the average borrowing $24,000 higher than last year.
“It's a real concern to see borrowers taking on more risk because interest rates are at record lows and expected to rise next year, which means borrowers can find themselves in financial trouble if they take on more debt than they can afford,” said Hutchison.
“For instance, if interest rates rise back to historical average levels of 5%, it would cost borrowers with a $300,000 home loan an extra $400 per month or about $4,800 in one year.”
Difference in average home loan sizes in each state compared to last year:
State | July, 2014 | July, 2014 | Difference | |
NSW | $366,700 | $336,000 | +$30,700 |
|
VIC | $333,000 | $293,300 | +$39,700 |
|
QLD | $301,300 | $282,200 | +$19,100 |
|
SA | $263,100 | $245,200 | +$17,900 |
|
WA | $312,800 | $296,400 | +$16,400 |
|
TAS | $215,500 | $208,300 | +$7,200 |
|
NT | $341,300 | $331,700 | +$9,600 |
|
ACT | $329,700 | $329,600 | +$100 |
|
National average | $319,000 | $295,000 | +$24,000 |
|
Source: Finder, ABS
