Most homebuyers signing on to new loans will be staring down the barrel of at least a $1 million mortgage, new research shows.
Buying a home at Melbourne’s median price, $633,000 which a 20 per cent deposit and a variable 5.5 per cent interest rate will pay back $1.035 million over a 30-year loan term.
The research, from mortage compairson website finder.com.au, found homes bought for $611,000-plus with a 20 per cent deposit at 5.5 per cent interest will cost borrowers $1 million.
Buying around Sydney’s median price, $825,000, with the same deposit and loan would cost the buyer $1.349 million.
Finder.com.au spokeswoman Michelle Hutchinson said borrowers risked spending more than necessary long-term.
“When borrowers look at how much they can afford to repay for a home loan, they might not look down the track to how much they end up spending,” she said.
“While it’s likely that your home will increase in value over a 30-year loan term, it might not compensate the cost of a home loan as the money you end up spending can be greatly increased if you have a small deposit and don’t shop around for a good value deal,” she said.
New home loan levels were flat in November, although there has been a small rise in the number of first homebuyers signing onto mortgages.
ABS data for November, released on Monday, showed the total value of dwelling finance was down 1 per cent, and up 0.6 per cent in trend terms.
The value of investor loans was up 0.9 per cent in trend terms, but fell 2.2 per cent seasonally adjusted.
In original terms, first homebuyer loans made up 11.6 per cent of all commitments signed in November, up from 11.4 per cent. While the rise was minimal, it was a rare gain after the number of first home loans has continuously fallen in the last 18 months or so.
Traditionally, first homebuyers have made up about 20 per cent of buyers across the long-term trend.
There has been a question mark over the ABS data around first homebuyers as borrowers who did not receive the first homebguyer’s grant are not included.
Anecdotally, a rising number of first-time buyers have purchased an investment property rather than a primary residence and therefore have not been counted in official data.