Mortgages Rise As Property Prices Surge

Homebuyers are facing hefty increases in debt as home prices surge. In some hotspots, like Queensland and Western Australia, borrowers are taking on tens of thousands of dollars in additional debt compared to just a year ago. This trend is driven by the relentless rise in property prices, forcing borrowers to borrow more to afford a home.

While the average new mortgage size has increased nationally, there are disparities across different regions. In places like Queensland and Western Australia, where property prices have soared, the average new mortgage size has risen significantly. For example, in Queensland, the average new home loan has surged by over 9% in a year, reaching almost $562,000 in February. Similar trends are observed in Western Australia, where the average mortgage has increased by over $21,000.

Conversely, some regions have experienced a decrease in mortgage sizes. In Victoria and New South Wales, despite rising property prices, the average mortgage size has shrunk. This is due to reduced borrowing capacity caused by higher interest rates, making it harder for first-home buyers to enter the market.

Overall, the housing market is characterised by contrasting dynamics. Existing homeowners are benefiting from increased equity, while first-home buyers are grappling with affordability challenges. Additionally, low stock levels in certain markets are hindering homeowners from selling and upgrading, further complicating the housing landscape.