Rising debts put lives and economy on hold

Debts have nearly doubled for Aussie homeowners in the last decade, according to new data from financial comparison site Mozo.

The data reveals that the average home loan size has jumped from $389,939 to $659,922, leaving homeowners spending $71 per day more on their mortgages than 10 years ago.

Aussies are also taking out fewer loans, despite incredible population growth over the decade.

ABS statistics showed 4,957 less new owner-occupier loan commitments for dwellings had been taken out in the March quarter of this year than the March quarter of 2015.

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Mozo personal finance expert Rachel Wastell said Australian borrowers are now navigating a mortgage market that looks nothing like it did 10 years ago.

“Borrowers aren’t just feeling the impact of 13 rate hikes in under two years, they’re carrying the weight of a decade of rising home loan sizes and relentless repayment pressure,” she said.

“Loan sizes are bigger, repayments have nearly doubled, and now people are paying the price.”

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Across the states, some borrowers have been hit much harder than others.

Tasmania and South Australia have more than doubled their average home loan sizes since 2015, with Tasmania recording the fastest growth in loan sizes nationally (111 per cent over ten years).

While NSW’s decade-long growth was more subdued in percentage terms, the dollar-value increase – $327,699 – is the largest jump of any state.

“Even if rates fall dramatically, that won’t change the fact Australians are now carrying significantly more debt than they were 10 years ago,” Ms Wastell said.

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She added that for families trying to manage rising living costs, this can mean putting off major life milestones.

“Not just renovations or home upgrades, but decisions like having kids or changing jobs may need to be rethought as the financial buffer just isn’t there anymore,” she said.

According to Ray White head of research Vanessa Radar, the loss of disposable income has a ripple effect on the nation’s economy.

“As Australians struggle with larger debt obligations, they are more inclined to reduce spending which in turn has a slowing impact on the broader economy,” she said.

“Uncertainty and low sentiment sees decision making pushed out and this “treading water” effect puts pressure on the economy moving forward.”

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