People in Australia are the most relaxed about carrying debt even though servicing costs are well above average and most have had no trouble meeting their monthly mortgage payments in the last year, an international survey shows.
The survey of home owners and aspiring first time buyers in eight countries showed one in five Australian home owners spent more than half of their after tax income on debt repayments.
On average, 45% of homeowners’ after tax income went to paying off debts, well above the average of 38% in the other countries surveyed – Canada, India, Ireland, Italy, Mexico, Britain and the US.
Also, 45% overpaid on their repayments, well above the average of 26% in the other markets, the Genworth International Mortgage Trends Report reveals.
‘Whether for financial or cultural reasons, Australians are the most relaxed about being highly leveraged, with one in three comfortable borrowing more than 80% of their home’s value, the highest proportion of the eight countries surveyed,’ said Genworth Australia chief executive Ellie Comerford.
Four out of five Australian homeowners interviewed said they had no trouble meeting their mortgage repayments in the last 12 months.
The level of confidence in the domestic economy among Australians was also higher than the total survey average, with 37% expressing confidence in Australia’s prospects, compared to 30% in other countries.
The research also shows that the average age of first time buyers in Australia was 28.6 years as of March, and the age had increased at a faster rate than the average age in the other nations.
‘Australian first time buyers are facing a worsening situation, with the average age of potential home buyers accessing the local market increasing at a faster rate than average,’ Comerford said.
She added rapid property price rises in recent years has been deterring potential first time buyers and this trend explains why potential Australian first time buyers surveyed don’t think now is a good time to buy, even though they want to.
For Australian homebuyers, the rising cost of living was the primary reason driving concern about personal finances, with 84% of those surveyed worried about how this will affect their personal finances and their ability to repay their mortgages over the next 12 months.
‘Growing concern about the rising cost of living among Australian home buyers is affecting their confidence in the housing market and could impact struggling borrowers in the future,’ Comerford explained.