Paying Off A Home Loan Gets Easier

CANBERRA: Stable house prices and falling interest rates have made it easier to afford a home, and Sydneysiders are getting the most benefit, according to figures released yesterday.

The December 1990 quarter home loan affordability report by the Real Estate Institute of Australia and the mortgage insurers, MGICA Ltd, shows a home loan in NSW still costs more than anywhere else.

Average monthly loan repayments in NSW were $1,190 in the December quarter, $232 above the Australian average and $240 more than Victoria, the next most expensive State.

But the NSW affordability rate showed most improvement for the second consecutive quarter, falling from 44.3 per cent of family income in the June quarter, to 42.4 per cent in the September quarter, and to 40.2 per cent in December.

The new figures show home loans are becoming easier to pay off in all States and Territories, with the ratio of home loan repayments to family income falling from 34.4 per cent in the September quarter to 32.8 per cent in the December quarter.

According to the survey, the median family income in NSW rose from $34,700 in the September quarter to $35,483 in the December quarter.

The chief executive of the institute, Mr Phil Roberts, said the disproportionately high number of job losses among lower income groups may have pushed the average wage figure up.

And the president of the Real Estate Institute of NSW, Mr John Greig, said the decrease in the cost of servicing new housing loans may be slightly exaggerated because of the higher proportion of sales at the lower end of the market during the December period.

But Mr Greig said there would be clear and substantial improvements in the affordability of homes during the March quarter because interest rates had dropped substantially, to as low as 13.75 per cent, while prices had remained stable.

The report said stable house prices and falling interest rates were the dominant factors behind the improved affordability in the December quarter.

Interest rates charged by banks for owner-occupiers' housing loans fell from an average 16.4 per cent in the September quarter to 15.5 per cent in the December quarter.

The rate of affordability has improved steadily throughout Australia since the September 1989 quarter, when the national ratio peaked at 36.5 per cent.

Home loans are most affordable for people in the ACT and the Northern Territory, followed by Tasmania, Western Australia, Queensland, South Australia, Victoria and NSW.

The managing director of MGICA Ltd, Mr Ian Graham, said the improvements would ease the burden of the recession for many Australians.