Remember when a $100,000 mortgage got you a nice house in the outer-suburbs on a quarter-acre block?
Those days are over with the average national mortgage facing a person buying an existing home having swelled to more than $500,000 fuelled by historically-low interest rates.
The total value of home loan approvals leapt by 4.4 per cent in December to be 14 per cent higher over the year. Since May, loans have climbed by nearly 21 per cent.
And NSW is the national leader in the boom; the Australian Bureau of Statistics recently announced that the average mortgage on an existing dwelling in this State grew by $112,600 to hit a whopping $621,500.
In Victoria, the average mortgage jumped $64,800 to $517,900 with Queensland coming in third at $419,800.
Economists say that the boom has been fed by the Reserve Bank’s decision in mid-2019 to cut official interest rates to a record-low .75 per cent. In comparison, interest rates in the early 1990s had reached nearly 16 per cent.
The national annual mortgage increase was worryingly well-above wage rises which grew by only 2.3 per cent in 2019.
Recognising this problem, Reserve Bank Governor Philip Lowe told a parliamentary committee last week that those borrowing more to buy a home with already high debt levels could cause wider economic problems in the long-run.First-time buyers have also taken advantage of rock-bottom interest rates with this segment growing by more than six per cent to be up 38 per cent over the year. First-up buyers normally account for about 30 per cent of the market.
