Whenever I do a random ass calculation on here to prove a point, I’ll often use the following example:

A $400,000 loan at 7% for 30 years.

Reading around the Interwebz it seems that this is actually not what most financial people use when they do example calculations.

yourmortgage.com.au

Let’s say you took a principal and interest loan for a $150,000 over a term of 25 years…

homefinanceguide.com.au

So if your balance is $20,000 and your home loan was originally $300,000…

mortgageaustralia.com.au

The interest charged on a $300,000 Home Loan at a rate of 7.15% over 30 years…

Now these all paint the rosey picture of first home owners that have the “average” loan of around $250,000 or so… but then I also come across other things like this from The Age:

For 22-year-old Ms Lay, support from her parents was the key to a contract for a $610,000 house and land package at Mirvac’s Harcrest estate in Wantirna South.

Now it doesn’t say specifically that this 22 year olds loan was $610,000*… but I don’t imagine it’d be too far off that. So on one hand we have loans as low as $150,000 and on the other loans as high as $610,000… which is it Australia? Well lets have a look at the raw stats shall we? Going to the Australian Bureau of Statistics we can find here that:

 In June 2011, the average amount borrowed by FHBs with a mortgage was $275,000 (in 2009-10 dollars), while the average amount borrowed by non-first home buyers with a mortgage was $305,000 (in 2009-10 dollars).

So there we have it, your average loan for Australians in 2010 is about $290,000. Unfortunately this is an average for all of Australia… and I fear that mortgages in Melbourne and Sydney will be far above this amount as housing is just simply too damn high.

Now I may be in some kind of freakish high mortgage bubble zone here… but many people I know have mortgages around the $400,000 mark and it’s clear that in Melbourne and Sydney at least, average mortgages are likely quite a bit above the $290,000 mark, likely $350,000+. As for the interest rates of 7%, I think that it’s quite fair given the normal figure people throw around is 8% and historically it has gone much higher. But I’d be very interested to hear if my assumption is correct or not so please post in the comments if you’d like

 

*HOLY CRAPSTICKS $610,000!???!! Even with a 10% deposit (which is considered almost “unobtainable” due to the high house prices here in Australia to most first home buyers) that’s a loan of around $550,000!! At 22!! That is one BIG. ASS. LOAN. I hope Ms Lay is an international movie star or something…

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Alex Shoolman

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