In 2009-10, 45.1% of Australian households have a property loan of some kind: 33.4% with loans for owner occupied dwellings and 11.7% for other property loansi.
While these loans can help us to live the lifestyle we want to lead, outstanding debts and monthly repayments can become a source of significant stressii. Indeed in the first quarter of 2011 the number of borrowers defaulting on mortgage repayments by 30 days or more climbed from about 1.4% to 1.79% - a record high for Australiaiii.
With basic living costs on the rise, buying a home can be difficult or unachievable without the help of a home loan, and rising mortgage commitment figuresiv reflect this. While the number of home loans taken out is not always constant month-to-month, data from the Australian Bureau of Statistics - as shown in Figure 1.0 below - reveals the average value of each home loan taken out has risen starkly over the last 10 years from $155,717 in January 2002 to $296,288 in January 2012.
Figure 1.0: Seasonally adjusted average per dwelling national monthly housing loan commitment value by month from October 1975 to 2011 (Source: Australian Bureau of Statistics, 2012)v
|State||Average Home Loan Jan, 2002 vi||Average Home Loan Jan, 2012 vii||Change from 2002 to 2012|
Figure 3.0: Average per dwelling home loan commitment by Australian state including construction of dwellings, purchase of newly erected dwellings and refinancing of established dwellings (Source: Australian Bureau of Statistics, 2012)
In December 2009, a total of $1.2 trillion in mortgage, credit card and personal loan debts were owed by Australians - equating to an estimate of $56,000 per individualviii.
None of us want to be in a situation where we can no longer pay off our mortgage or other debts, but unfortunately this has become the reality for some Australians. The 8th Annual Demographia International Housing Affordability Survey found that in 2011 the majority of metropolitan property markets in Australia were 'severely unaffordable'ix. With our average cost of living highx and the average cost for households with a mortgage having increased by 42% in the past decadexi, it's easy to see how debts can overwhelm us!
Outstanding debts can become a considerable burden on your loved ones in the event that you become critically ill or pass away. Having adequate insurance in place can help to ease this burden by providing the funds to pay debts, and cover the ongoing cost of living. Get a life insurance quote online from Allianz today and take the first step towards safeguarding your family's finances.
i Australian Bureau of Statistics, 2011, Social Trends Dec 2011: Components of Household Wealth, http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features10Dec+2011#Contents2
ii Keane, A., 2011, Clamp down on mortgage stress, News Limited newspapers, http://www.news.com.au/money/property/clamp-down-on-mortgage-stress/story-e6frfmd0-1226219591292
iii ABC News, 2011, Mortgage arrears hit record highs: 26 May 2011, http://www.abc.net.au/news/2011-05-26/mortgage-arrears-hit-record-highs/2732556
iv Australian Bureau of Statistics, 2012, 5609.0 Housing Finance 2012, http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0
v Australian Bureau of Statistics, 2012, 5609.0 Housing Finance 2012, http://www.abs.gov.au/ausstats/abs@.nsf/mf/5609.0)
vi Australian Bureau of Statistics, 2002, 5609.0 Housing Finance, http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/B808AC506D2A24C5CA256B79007DB7F0/$File/56090_jan%202002.pdf, p.14
vii Australian Bureau of Statistics, 2012, 5609.0 Housing Finance, http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/CB768E27C6FDE9B3CA2579BC000BC83B/$File/56090_jan%202012.pdf, p.18
viii AAP, 2009, Aussies $1.2 trillion in debt, Sydney Morning Herald, http://news.smh.com.au/breaking-news-national/aussies-12-trillion-in-debt-20091227-lfx1.html
ix Demographia, 2012, 8th Annual Demographia International Housing Affordability Survey: 3rd Quarter 2011, http://www.demographia.com/dhi.pdf, p.11
x Australian Bureau of Statistics, 2011, Analytical Living Cost Indexes for Selected Australian Household Types, Dec 2011, Table 1: Estimated average weekly expenditure during 2009-10, Household type by Commodity group, http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6463.0Explanatory%20Notes1Dec%202011?OpenDocument
xi Australian Bureau of Statistics, 2011, Housing costs for owners with a mortgage up 42% over past decade, media release nov 2011, http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/4130.0Media%20Release12009-10?opendocument&tabname=Summary&prodno=4130.0&issue=2009-10&num=&view