Aussie home buyers deeply in debt, but paying it off fast

Australian homebuyers are among the most indebted in the world, but are also the fastest at paying off their debts, according to the inaugural Genworth International Mortgage Trends Report.

More than a third (39%) of the 1,000 Australian surveyed use more than half their income to pay down debt.

But despite being heavily geared, Australians are managing their repayments, with 45% of respondents overpaying their mortgages in the last year, a significantly higher figure than the global average of 26% and the second highest proportion of the eight countries surveyed by Genworth.

Australian homebuyers are among the most indebted in the world, but are also the fastest at paying off their debts, according to the inaugural Genworth International Mortgage Trends Report.

More than a third (39%) of the 1,000 Australian surveyed use more than half their income to pay down debt.

 

Australia

US

UK

Canada

Global

Cash rate

4.75%

0%

0.5%

1%

2.4%

Mean % income (after tax) spent servicing all debts

45%

49%

39%

45%

38%

% comfortable borrowing more than 80% of home value

35%

26%

22%

28%

20%

% who had trouble repaying mortgage

21%

21%

18%

21%

22%

% overpaid mortgage

45%

28%

24%

19%

26%

% believe now is a good time to buy a home

42%

62%

48%

47%

42%

% are positive about the state of economy

37%

25%

13%

38%

30%

Source: Genworth International Mortgage Trends Report.

The survey indicates Australians are comfortable with repaying large mortgages.

One in three Australians are comfortable borrowing more than 80% of their home’s value, the highest proportion of any country surveyed, compared with one in five in the US, the UK, Canada and Ireland.

“Whether for financial or cultural reasons, Australians are the most relaxed about being highly leveraged,” Genworth Australia CEO Ellie Comerford says.

First-home buyer sentiment in the survey is in line with the recent REIA/Deposit Power Housing Affordability report, which found that just 15.4% of the “dwelling finance” market in the March 2011 quarter is made up of this sector of the market. 

High property prices and high interest rates are the two biggest factors inhibiting Australians from buying property.

However, Australians have more confidence in their local housing market than all of the other countries surveyed except Mexico. About 50% of Australian respondents listed an unstable housing market as a reason for not buying property right now, compared with more than 70% of Americans and the more than 60% of British respondents.

A third of Australians are positive about the state of the economy (37%), compared with just a quarter of Americans and just 13% of British home owners and potential home owners.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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