Australian homeowners highly indebted, but determined to pay off their properties

A new international study shows a large number of Australians are suffering mortgage stress, spending more than half of their income on debt repayments, and the average first home buyer is older than those overseas.

The Genworth International Mortgage Trends report found that 39% of Australian respondents use more than half their income to service debt.

Forty-five percent of the Australian respondents reported they overpaid their mortgage last year, which was the second-highest proportion of the survey.

“Whether for financial or cultural reasons, Australians are the most relaxed about being highly leveraged, with one in three comfortable borrowing more than 80% of their home’s value: the highest proportion of the eight countries surveyed,” Genworth Australia chief Ellie Comerford says.

The study, by lenders mortgage insurer Genworth Financial, is based on a survey of more than 9,000 homeowners or aspiring homeowners from Australia, Canada, India, Ireland, Mexico, the UK and the US.

It also showed the average home buyer across the eight countries has increased to 30, from about 27 in the 1970s.

“Australian FHBs are facing a worsening situation, with the average age of potential home buyers accessing the local market increasing at a faster rate than average,” Genworth Australia CEO Ellie Comerford says.

“The Australian market, like the Indian and Canadian markets, is characterised by rapid property price rises in recent years, deterring potential FHBs, and explaining why potential Australian FHBs surveyed don’t think now is a good time to buy, even though they desire to,” says Comerford.

The survey comes as official figures this week showed the percentage of total owner-occupied housing finance commitments for first home buyers dipped in April, although the average loan size rose to $285,400.

And with property prices relatively flat and interest rate rises expected by the year’s end, the Australian Financial Review reports that there are increasing concerns about the increase in housing arrears to 0.7 of a percentage point. According to the report, the concerns are centred on loans written in 2008 and 2009, the latter of which account of the banks’ portfolio.