March 22, 2016
Almost a quarter of Australians have a financial buffer equivalent to year’s wages in their mortgage according to the results of a survey from a major mortgage broking network.
According to the 2016 Money Survey from Mortgage Choice, 23.4% of Australians are completely up to date with their mortgage payments and also have the equivalent of at least 12 months wages sitting in their offset account or paid off their loan.
That figure is well up on from the results from 2015, when only 13% of respondents said they were as comfortable financially.
Borrowers in Victoria and New South Wales are most financially comfortable, with 27.4% and 26% respectively stating that they have more 12 months wages in their home loan, followed by Western Australia at 24.3%.
In Queensland and South Australia, 19.8% and 19.5% of respondents said they were in the equivalent financial position.
Mortgage Choice chief executive officer John Flavell said the results show that Australian borrowers are becoming increasingly comfortable with their financial situation as a result of making smart decisions.
“Contrary to popular belief, it is becoming more and more apparent that Australian home owners are feeling pretty confident about their finances and are making financial decisions that reflect this confidence,” Flavell said.
“The survey found that the vast majority of mortgage holders are ‘very comfortable’ managing their debt. Of course, this data is hardly surprising when you consider that interest rates are currently sitting at 60 year lows, resulting in significantly lower mortgage repayments for most home owners,” he said.
It appears the majority of Australians are committed to making the most out of the current low interest rate environment, with the survey showing a large majority are either making additional repayments or storing funds in an offset account.
“Of the respondents surveyed, 83.3% said they were either making additional mortgage repayments each month or had a decent amount of savings stored in their offset account.”
“The more money you contribute towards your mortgage each month or the more money you have in your offset account, the faster you will pay off your debt.”
Mortgage Choice claims that if a borrower placed the average Australian annual net salary of $61,441 in an offset account they would pay back a $350,000 mortgage at an interest rate of 5% seven years earlier and save $153,000 in interest.
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