Australia’s super-sized mortgages climb $154 a day to record high

The nation’s average mortgage has reached a record high of $637,000 after climbing $154 a day over the past 12 months, as independent analysis finds a Coalition plan to allow first home buyers to tap into their superannuation would improve the federal budget by almost $200 million a year.

Ahead of a critical meeting of the Reserve Bank board, figures from the Australian Bureau of Statistics released on Friday showed the average mortgage increased by $56,000 last financial year.

NSW’s average mortgage has lifted by $55,000 since last June to $780,000. It has been higher only once – in December last year when it was $785,000. Victoria’s average loan has risen by 2.5 per cent to $604,300.

Average mortgages are at record highs in Western Australia, Queensland and South Australia. In WA, the average loan soared by almost $100,000, or 20 per cent, over the 12 months, to $566,600. Queensland’s average home loan increased by 16.5 per cent, or $85,000, to $599,300.

Among first-time buyers, the average mortgage is now $534,800, a $37,000 jump.

Mortgages could get even larger in the coming months.

ANZ senior economist Blair Chapman noted the average loan for existing property owners was now approaching $800,000, climbing by 1.2 per cent in June alone.

“Positive real wage growth and the recent stage 3 tax cuts should see borrowing capacity rise, which, combined with continued housing price growth, is likely to see loan sizes continue growing,” he said.

The 9.7 per cent annual increase in mortgage size has outpaced house prices, which have increased by 7.6 per cent.

The rise in mortgages, and the ability of Australians to repay them, is a growing issue for the Reserve Bank board, which meets on Monday and Tuesday. Following Wednesday’s consumer price index, which showed inflation in line with the RBA’s forecasts, financial markets and most economists believe the bank has finished with rate rises.

Credit bureau Equifax’s executive general manager, Moses Samaha, said the number of people behind on their mortgage repayments was growing, particularly among those considered to be an “average” credit risk.

“Any rate rise would further push household finances to a knife’s edge, widening the impact across other cohorts that so far have been able to protect their mortgage payments,” he said.

The lift in mortgages and house prices, coupled with soaring rents, has contributed to a growing political debate about how to help people afford housing.

The Coalition went to the 2022 election promising to allow people to access up to $50,000 of their superannuation to buy their first home. The money withdrawn from super would have to be returned when the house was sold to support retirement.

Analysis of the policy by the independent Parliamentary Budget Office, on behalf of the Coalition’s home ownership spokesman, Senator Andrew Bragg, suggests the move would help the budget by reducing the number of people requiring Commonwealth Rent Assistance.

The analysis, which assumes about 20 per cent of renters aged between 35 and 45 would use their super to buy a home, found it would reduce the cost of the rent assistance program by about $170 million a year, or $689 million over four years.

The budget office cautions that people receiving rent assistance generally have negligible superannuation savings. Its analysis is based on a sample of the population with high super balances. It also does not consider the impact of the policy on federal superannuation tax collections, which would fall.

Bragg said the analysis showed the Coalition’s policy had merit beyond helping people buy their first home, describing the fiscal dividend as “significant and surprising”.

“We don’t want to have a situation where someone’s chance of having a home is determined by the bank of mum and dad,” he said.

In his budget reply speech, Liberal leader Peter Dutton confirmed the Coalition would take its super-for-housing policy to the next election.

There has been pressure from parts of the Coalition for the party to go further. A Senate economics committee interim report earlier this year recommended the $50,000 cap be either increased to $150,000 or abolished completely.

The policy has attracted heavy criticism from the superannuation sector and some housing experts who believe it will drive up property prices.

The Labor-aligned McKell Institute has estimated the policy would push house prices up by $69,000 in Sydney and by $108,000 in Melbourne.

It noted that a COVID-era stimulus policy that enabled people to withdraw up to $20,000 from their super had left many people facing a huge fall in their retirement nest egg. Some analysis has shown people who accessed the scheme will have $120,000 less in retirement savings.

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