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Global house prices may be hitting a turning point, according to recent OECD data analysis by the Financial Times, with many developed markets starting to rebound from sluggish periods of little to no growth. But that’s not the case for Australia, which despite 13 rate rises in 18 months has proven remarkably resilient to a downturn.
“While the housing market may be recovering for many countries, in the UK, Canada and Australia, price pressures had remained high due to migration and restrictive planning permission,” Tomasz Wieladek, economist at T Rowe Price, told the Financial Times..
Since the onset of the pandemic in March 2020 to January this year, capital city house values in Australia have increased by 33.9% or by $239,000 according to recent data by CoreLogic.
This price spike, combined with the RBA’s rate rise spree, has meant mortgages have become increasingly expensive to service, especially for mortgage holders rolling off fixed rates as low as 2% to variable interest rates of around 6%.
How Much Is The Average Mortgage In Australia?
The latest lending data from the ABS shows that the average mortgage size in Australia was $624,000 as of December 2023. This is for owner-occupied dwellings, rather than loans specified for first-home buyers or investors wishing to rent out a property.
This figure is still much higher than pre-pandemic levels, the ABS says, with the spree of rate hikes over the past 18 months, denting but not reversing dwelling values.
In New South Wales, the mortgages are the highest, with the average loan coming in at $785,000. Comparatively, the lowest average loan for a state is $450,000, which is the most recent figure for the Northern Territory.
Here’s a breakdown of the current average loan size across the country:
Compared to the 12-months prior, or December 2022, nearly all states and territories had experienced an annual price increase.
The only three that didn’t were Victoria, the Northern Territory and Tasmania: Victoria had an annual change of -1.8%, or -$11,000, while the NT had an annual change of -2.7%, or -$12,000, and Tasmania had a change of -1.9% (-$9000).
The latest lending data from the ABS shows that the average mortgage size in Australia was $624,000 as of December 2023
Queensland saw the most dramatic change, increasing in mortgage loan values by 9.8%, totalling +$51,000,
The next table outlines the annual change all states and territories have experienced over the past 12 months since the data set, including the percentage difference and the monetary difference.
How Much Will a Mortgage Cost Me?
Taking out a mortgage in order to buy a property is a major financial decision, which requires thorough research to ensure repayments can be met over the life of the loan and an understanding of how principal and interest repayments work.
According to the RBA, the average mortgage rate offered by Australian lenders is currently 6.8%. Experts anticipate that this rate will lower towards the end of 2024 as the RBA moves to cut rates but, for now, we will use this rate as an example of possible repayments.
To formulate the below table, Forbes Advisor Australia has considered the average loan size for each state or territory, at the average Australian mortgage rate of 6.8%, for a loan term of 30 years. This is also without making any additional monthly repayments.
For a more specific estimate tailored to your own situation—such as your individual interest rate, loan term and any other additional monthly payments you intend to make—use our free online mortgage repayment calculator to help better understand your repayments.
How To Find The Best Home Loan
It’s clear that a home loan is a huge financial decision, especially considering it is one that will affect your budget for many years to come and take many years to pay off. That’s why it’s essential to shop around for the best home loan on the market, making sure to find one tailored to your needs and budget.
First, you should understand your borrowing capacity and the type of loan that suits your purpose or preferred repayment method. Then you can start to consider some of the finer details of loan offerings, such as:
- If it includes the features you need, such as offset accounts and allowing you to split your loan if necessary;
- How much it costs for extra features, such as a free redraw facility;
- Whether or not the sign-up bonuses are worth it in the long term;
- If the interest rate is appropriate when you factor in all fees;
- How the loan application process works, including whether pre-approval is possible.
Our guide to the best home loan rates this year can help you find appropriate choices, as well as explaining in-depth what home loan would suit you best in accordance with your needs.
Frequently Asked Questions (FAQs)
What is the average age to pay off a mortgage in Australia?
According to estimates, the average Australian pays off their mortgage somewhere between 60 and 65 years. However, this age depends on a multitude of factors, including what age you were when purchasing your property, whether you purchased it independently or with another person, how long your loan period is, and any other additional repayments you make.
To find out how you can repay your mortgage faster, read our guide here.
What was the average mortgage price in 1990?
“Twenty five years ago, the median house value across Australia was just $111,524,” Aussie Home Loans said in a recent report, published in conjunction with CoreLogic.
This means that over the past 25 years, the median house value nationally has risen by 412%, or $459,900.
As for mortgages, “the average loan size has broadly increased in line with dwelling prices across Australia, with the typical loan size reaching $388,100,” the report reads. This is an increase of 376%.
What is the current mortgage rate in Australia?
The average mortgage rate in Australia is currently 6.8%, according to the RBA. You may be able to secure a better rate if your have considerable equity in your home and a history of making repayments on time.
