Mortgage Affordability At Its Worst Since 1990
Home buyers are struggling
Home buyers are facing the worst mortgage affordability in over 30 years as interest rates continue to rapidly rise.
According to Betashares modelling, a buyer would need to pay 45.4 per cent of their household income to afford a home with a median price tag.
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It is the highest home buyers have had to pay since the September quarter in 1990 when it was 45.5 per cent.
Those looking for a new home in Sydney are facing the most difficulties as the city has a higher median house price. A Sydney buyer would need 61.8 per cent of their household incomes in the quarter to pay their mortgage.
In Melbourne, buyers are facing the highest repayments on record, 44.4 per cent of incomes, in Brisbane 40.7 per cent is required, while in Perth, 30.1 per cent.
Affordability is at its worse following 11 rate hikes in the past year; a further two more hikes at 0.25 per cent each would make mortgage affordability the worst on record.
Betashares chief economist David Bassanese told The Sydney Morning Herald mortgage burden for new home buyers is almost as bad as it was in the ‘90s.
“While interest rates remain far lower than during the early 1990s … the reality is that the mortgage repayment burden today is almost as great, due to the large run-up in house prices relative to income over the past 30 years,” Bassanese said.
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