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Mortgage expenses rise by 43.5% in six years

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Reporter 4 minute read

Australians are spending 43.5 per cent more of their income on principal repayments on their home loans, according to the latest ABS data.

According to the Australian Bureau of Statistics’ (ABS) latest Household Expenditure Survey, published every six years, borrowers made principal repayments of $71 per week in 2015–16, up by 43.5 per cent from $49 in 2009–10.

Additionally, the latest data has revealed that overall housing costs, which include interest repayments on mortgages, made up the largest portion of household expenditure in 2015–16 ($279 per week) and rose by 25.1 per cent from 2009–10 ($223 per week).

“In 1984, the largest contributors to household spending were food (20 per cent), then transport (16 per cent) and housing (13 per cent),” ABS chief economist Bruce Hockman said.

“Jump forward to 2015–16 and housing is now the largest contributor (20 per cent), followed by food (17 per cent) and transport costs (15 per cent).”

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Further, the ABS reported that housing costs as a proportion of overall expenditure varied based on household wealth.

Housing costs made up 30 per cent of overall expenditure for “low-wealth” households, compared to 19 per cent for “middle-wealth” households and 14 per cent for “high-wealth” households.

“Low-wealth households are likely to be renting, while middle-wealth households are likely to have a mortgage that offsets the value of their home,” the ABS noted.

“For these reasons, low and middle-wealth households have higher housing costs, including rent or interest on mortgage repayments.

“Households with high net worth are more likely to own their own home with little or no mortgage outstanding on their own home, and therefore have much lower housing costs.”

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According to the ABS, 5 per cent of low-wealth households own their own home either outright or with a mortgage, compared to 90 per cent of middle-wealth households and 96 per cent of high-wealth households.

The survey data also found that in 2015–16, 1.3 million households (15 per cent) reported four or more markers of financial stress, down from 16 per cent in 2009–10.

Moreover, the proportion of households that did not report experiencing any markers of financial stress steadily increased, from 54 per cent in 2009–10 to 59 per cent in 2015–16.

In total, the ABS research found that Australian household spending on goods and services increased by 15 per cent between 2009–10 and 2015–16, rising from an average of $1,236 per week to $1,425.

[Related: Home loan arrears rise in first quarter of 2018]

Mortgage expenses rise by 43.5% in six years
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