06.13.2018 Buying Tips

How Much Is The Average Mortgage?

How Much Is The Average Mortgage?

With property prices rising steadily over the years, we take a look at the figures behind the average mortgage.

Where does Sydney’s east fit in? And is it really becoming more difficult to service the average home loan?

What is the average mortgage?

According to the Australian Bureau of Statistics (ABS), there has been a slight fall in the average mortgage size over the first three months of 2018, since it hit a peak of $393,300 in December 2017. The size of an average home loan in Australia is currently around $388,100.

The average mortgage in New South Wales is slightly higher at $445,500.

Average mortgages in Sydney’s eastern suburbs

Obviously, we pay a lot more than this for property in blue chip areas in Australia’s cities, such as the eastern suburbs. So you’d probably expect the average mortgage to be higher too.

According to Canstar, on a 30-year loan of $400,000 – roughly comparable to the average Australian mortgage – with an interest rate of 4.42%, you’d be paying around $2,205 a month.A quick look at Census 2016 statistics show us the median monthly mortgage repayments in Sydney’s eastern suburbs are quite a lot higher, with Paddington topping the list:

Paddington: $3,500

Vaucluse: $3,467

Woollahra: $3,200

Darling Point, Edgecliff, Double Bay, Bellevue Hill, Rose Bay, Queens Park and Waverley: $3,000

Bondi Junction: $2,800

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Watsons Bay: $2,700

Randwick, Kensington and Bondi: $2,600

Darlinghurst: $2,500

Historical mortgage trends

While these figures may reflect the broader market today, two key trends are visible when you look at the average mortgage over time.

First, it’s obvious that the more time you’ve had in the market, the smaller your mortgage is likely to be. Ten years ago in 2008, the average Australian mortgage was $243,600; twenty years ago in 1998 it was $114,700, and thirty years ago in 1988 it was just $55,300. So there’s definitely an opportunity cost to not getting into the market as soon as you can and, over the long-term, the property market has performed outstandingly, despite any short-term bumps. This is also true for Sydney’s east where average prices have risen spectacularly over the past decades.

Second, despite a much higher average home loan, the cost of servicing that loan is now cheaper than it has been for some time. Official interest rates averaged around 5.75% per cent last decade and peaked at 7.25% in 2008. They’re now at 1.5%. The advertised variable rates have also fallen more-or-less in line with this. This also makes a big difference to affordability. For instance, if you were trying to service a 30-year loan of $400,000 with a lender’s interest rate of 8%, you would need to pay $2,935 a month, or 33% more than you would at today’s average standard variable rate.

Read our story about The Top Eastern Suburbs for Capital growth here.

Or contact our team today if you’re interested in buying or selling in Sydney’s eastern suburbs.