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Wednesday, 4 August 2021

Some basic stats on mortgage stress

Repayments get easier again

The household debt to income ratio was basically flat at 1.81x in the first quarter of the year.

This is notably lower than the 1.87x seen in 2019, but up a bit from 1.66x recorded 15 years ago (although mortgage offset account balances have ballooned since that time, greatly reducing mortgage stress and risk.  

More pertinently, mortgage rates on new loans have once again declined, having now fallen by about 110 basis points since July 2019, while existing borrowers have also rushed to refinance to cheaper rates. 

The housing interest payments to income ratio has therefore declined yet again to 4.7 per cent, down from a peak of 10.6 per cent in 2008. 

Mortgage interest repayments for households are effectively only half the level they were at a dozen years ago.

Indeed, mortgage interest payments are now at the most comfortable level this century.