Mortgage nightmare: Aussies spending half their income on home loans as investors flee

Australian families are now spending a staggering half their income on mortgage repayments, as fresh figures reveal investors are fleeing the property market and desperate homeowners are scrambling to refinance.

PRD Real Estate’s latest Australian Economic and Property Report found mortgage repayments now consume a record 50.9 per cent of family income, as four interest rate hikes this year and growing loan sizes push housing affordability to breaking point.

New research reveals the average Australian family is spend more than 50 per cent of their income on mortgage repayments.

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Affordability has deteriorated by 3.3 percentage points over the past year, wiping out gains made during last year’s rate cuts.

And new figures from mortgage brokerage Loan Market reveal just how dramatically buyers are retreating.

Loan lodgements, excluding refinancing, have plunged 24 per cent nationally since January, with Queensland recording a sharper 30 per cent fall.

Investors are leading the exodus, with loan lodgements collapsing 44 per cent nationally and a staggering 56 per cent in Queensland — the biggest decline of any state.

Research from Loan Market reveals loan lodgements have collapsed 44 per cent nationally and a staggering 56 per cent in Queensland — the biggest decline of any state.

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Nationally, investor lodgements for existing properties have plunged 56 per cent, compared with a 10 per cent fall for new properties, as changes to capital gains tax and negative gearing add to uncertainty.

Loan Market credit expert Shay Waraker said buyers were increasingly reluctant to commit.

“As property prices decline and interest rates increase, buyers are likely exercising caution,” Ms Waraker said.

“With borrowing capacities impacted by increasing rates, buyers may be waiting to see if prices fall further before jumping into the market.”

First-home buyer lodgements have fallen 18 per cent in Queensland, while applications from owner-occupier upgraders are down 15 per cent.

PRD Real Estate’s latest Australian Economic and Property Report found mortgage repayments now consume a record 50.9 per cent of family income.

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Meanwhile, existing homeowners are hunting for relief, with refinancing reaching a record 57 per cent of all Loan Market Group lodgements in September.

“In this current climate, many homeowners are looking for some wriggle room in their budgets,” Ms Waraker said.

The figures come as PRD’s report reveals average housing prices have fallen 1.6 per cent from their March peak, led by Sydney and Melbourne.

First-home buyers are also taking on significantly more debt, with their average loan size increasing 10 per cent over the past year.

PRD chief economist Dr Diaswati Mardiasmo said higher interest rates and cost-of-living pressures were forcing households to become increasingly cautious.

“There is no doubt that the economy is feeling the pressure,” she said. “In the real estate world, we are seeing this translate into longer days on market and, in some areas, a softening in median house and unit prices.”

PRD chief economist Dr Diaswati “Asti” Mardiasmo.

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However, the downturn could present opportunities for buyers with secure finances.

PRD’s national Time to Buy a Dwelling Index has fallen 8.3 per cent annually to 88.4 points, although Victoria and NSW recorded the highest readings at 93.1 and 93 respectively.

Queensland and Western Australia, meanwhile, recorded the strongest monthly improvements in buying sentiment.

Despite the mortgage squeeze, widespread financial distress has yet to emerge, with fewer than 1.5 per cent of housing loans in arrears and less than 0.5 per cent of outstanding mortgage balances in negative equity.

With interest rates expected to remain elevated until at least 2027, Dr Mardiasmo urged buyers to focus on local market conditions and their individual finances rather than alarming national headlines.