Majority of Australians are ahead on their mortgage repayments: survey

A new study by Mortgage Choice has found that almost one in four Australians have a financial buffer of more than 12 months’ wages in their mortgage.

According to the 2016 Money survey, 23.4% of respondents are not only up-to-date with their mortgage repayments, but they have the equivalent of at least 12 months’ wages sitting in their offset account or paid off their loan. By comparison, in 2015, only 13% of respondents said they were in the same financial position.

Local Mortgage Choice franchise owner, Rhye Livingstone, said it is pleasing to see that so many Australians are building a significant financial ‘safety net’ into their mortgage.

“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,” he 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.  

“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.”

With interest rates so low, Mr Livingstone said now was the perfect time for mortgage holders to ramp up their mortgage repayments or plug more money into 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,” he said.

“Data from the Australian Bureau of Statistics shows that the average gross wage for an Australian full-time worker is approximately $81,000 a year,” he said.

“If the average worker was to have their net salary ($61,441) sitting in their offset account, they could potentially shave 7 years off a $350,000 home loan with an interest rate of 5%. Better yet, they would be able to save themselves more than $153,000 in interest*.

“Having a substantial amount of money in your offset account or contributing additional funds to your mortgage each month can help you to shave years off the life of your loan and potentially save you thousands of dollars in interest.”

Across the nation, borrowers in Victoria and New South Wales had the biggest financial buffer in their mortgage, with 27.4% and 26% respectively stating that they have more than 12 months’ wages in their home loan. Western Australia was not far behind, with 24.3% stating that they had more than 12 months’ wages in their mortgage, while 19.8% and 19.5% of respondents in Queensland and South Australia were in the same position.

“It is interesting to note that Victoria and New South Wales are the front runners in this particular field, given that property prices (and therefore mortgages) are among the highest in the country.”

If you would like learn more about your home loan or financial advice options, call 0459 958 893 Or, visit

https://www.mortgagechoice.com.au/rhye.livingstone

*This calculation assumes that the net income of $61,441 was sitting in the offset account from day one (or settlement day) of the loan.

Table 1: Income buffer

How much of an after tax income buffer do you have in your mortgage?

National

NSW

VIC

QLD

SA

WA

No spare funds

16.7%

10.6%

11.6%

17.8%

20.4%

20.4%

Less than one month’s wage

13.6%

18.3%

9.5%

14.9%

11.7%

14.6%

1 month’s wage

8.6%

7.7%

9.5%

9.9%

10.7%

5.8%

2 months’ wages

16.9%

8.7%

21.1%

21.8%

17.5%

17.5%

6 months’  wages

20.8%

28.8%

21.1%

15.8%

20.4%

17.5%

12 months’ wages

8.8%

15.4%

8.4%

5.0%

7.8%

6.8%

13-23 months’ wages

7.2%

8.7%

10.5%

5.9%

3.9%

7.8%

2 to 4 years’ wages

4.9%

1.9%

3.2%

6.9%

4.9%

6.8%

More than 4 years’ wages

2.5%

0.0%

5.3%

2.0%

2.9%

2.9%

 

For further information or to arrange an interview, please contact:

Rhye Livingstone

Mortgage Choice Frankston

Ph: 0459 958 893

Rhye.livingstone@mortgagechoice.com.au

 

Important information

This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the advice, consider its appropriateness to your circumstances.

 

About Mortgage Choice

Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs.

Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.

Since that time, the company has grown and developed into a fully fledged financial services provider.

Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance.

Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers.

Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).

Mortgage Choice holds an Australian Credit Licence: no. 382869 and Mortgage Choice Financial Planning Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.

Recent recognition: 2015, 2014 Australian Broking Awards Best Diversification Program; 2013, 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social Responsibility Program; 2012 Australian Broking Awards Best Training and Education;   No.1 on The Adviser magazine’s 2012, 2011, 2010 and 2009 Top 25 Brokerages list; 2012, 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list.

Visit www.mortgagechoice.com.au or call customer service on 13 77 62.

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