The latest monthly authorised deposit-taking institutions statistics (MADIS) for February 2021 shows Australia’s total mortgage debt increased by 0.3% ($9.7 Billion). This figure has come as a surprise to many.
High property prices have affected the bottom 60% of income earners. That leaves only a maximum of 20% of properties in the market affordable for them.
In such a case, even opting for a mortgage would mean they would have to make heavy deposits for the current higher-priced properties.
So, how is the total mortgage debt still increasing?
Here are two reasons people are still borrowing:
- Government mortgage support schemes like First Home Loan Deposit Scheme (FHLDS) and HomeBuilder Grant
- Low borrowing costs as a result of interest rates remaining low
Thus, the same two factors have led the lending institutions to witness an increase in their mortgage books. According to the Australian Prudential Regulation Authority (APRA), CBA and Westpac saw the highest mortgage lending increase.
Westpac’s mortgage book increased from $406.6 billion in January to $408.0 billion in February (0.35 per cent rise). CBA’s mortgage book had the highest increase among lenders, with $468.0 billion in January 2021 to around $469.9 billion in February.
What does the current trend mean for you?
From a new borrower’s perspective, the increase in mortgage debt means that more people are applying for loans, and hence, you have more competition.
If you do not choose the right lender that best suits your profile, your application is more likely to be rejected. Knowing which lender to choose for a quick home loan application process to get your mortgage through fast is necessary.
Additionally, with deferral programs ended, those who might be struggling financially after the end of JobKeeper might want to refinance their loan.
Refinancing into a home loan package that is interest-only, has a lesser interest rate, or allows debt consolidation can help ease the temporary financial struggle.
Our expert mortgage brokers can help you with a swift mortgage process, matching you with the best lender. They can also get your current mortgage refinanced for a better deal.
Call us on 1300 889 743 or enquire online and we can then discuss your situation with you.