Aussies carrying debt well: Genworth

By |

Australians carry a high level of debt compared to other countries, but manage it well, Genworth has claimed.

In the insurer's new Genworth International Mortgage Trends Report, it has found that Australians spend 45% of their after-tax income on servicing debts. This compares to a 38% average in the other countries Genworth surveyed. The study, which looked at mortgage trends in Australia, Canada, India, Ireland, Italy, Mexico, the UK and the United States, found Australians are also more comfortable borrowing larger amounts to buy a home. Thirty-five per cent of Australians surveyed said they were comfortable taking out a mortgage above 80% LVR, as compared to 20% in the other countries surveyed.

Debt servicing, however, does not seem to be a problem for Australian households. The report indicated Australia outpaces most other countries when it comes to making extra payments on home loans. Forty-five per cent of Australians said they typically overpaid on their mortgage, while the eight-country average was only 26%. Australia was second only to India in the category, where 56.2% of borrowers make extra mortgage payments.

Though the study found Australians are performing well in servicing their debts, debt could stand as a potential barrier of entry to the housing market. One in five potential first home buyers indicated they spend more than 50% of their incomes servicing debt. Genworth CEO Ellie Comerford said this, plus concerns regarding housing affordability, could explain why many first time buyers are entering the market later. The study found the average age (28.6 years) of first time buyers in Australia, while below the eight country average of 30.1, is increasing rapidly.

"Australian FHBs are facing a worsening situation, with the average age of potential homebuyers accessing the local market increasing at a faster rate than average," she commented.

Can you afford to buy in this suburb? Find out how much you can borrow

Top Suburbs : revesby hts , spearwood , woolloongabba , canterbury , westbrook

go back

Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here