On January 29, 2016

Mortgage costs are on the rise

The type of mortgage solutions buyers are seeking is changing, especially as the value of homes in many parts of the country starts to rise. Analysis of official lending figures by the Real Estate Institute of Australia (REIA) showed that properties are generally becoming less affordable a trend that's been seen in five out of eight states and territories.

Factors affecting affordability

Australians found they needed to dedicate a greater proportion of their monthly income to mortgage costs in the September quarter, the Adelaide Bank/ REIA Housing Affordability Report found. This could see people staying in rental property for longer – benefiting the nation's investors.

Choosing the right mortgage is essential to any property investment.Choosing the right mortgage is essential to any property investment.

Rising property prices are partly to blame for this, as well as the increasing cost of living the nation faces. Figures from the Australian Securities and Investments Committee show residents of New South Wales contend with the highest living costs, spending an average of $1,265 a week. Sydney in particular has a strong rental market, and with property prices rising, it's not surprising this is a hot bed for investment activity.

At the other end of the spectrum is South Australia, with average weekly costs of $1,044. President Neville Sanders explained the average family now needs to dedicate 31.7 per cent of their monthly spending to paying off their home loan. This marks a rise of 1.4 per cent from the June quarter and an increase of 1.3 per cent from a year earlier.

The REIA also identified New South Wales the worst affected regions in terms of affordability during the three months of September.

The property investment mortgage landscape has undergone a number of changes over the past year.

"New South Wales recorded the biggest fall in housing affordability across the country," Mr Sanders revealed.

"[It] is still the only state or territory with an average loan size above $400,000, however Victoria follows closely at $390,503."

Accessing mortgage finance

The property investment mortgage landscape has undergone a number of changes over the past year, showing that it's not only owner occupiers who are affected by rising living costs and house prices.

The Australian Bureau of Statistics found that in October, the number of dwelling commitments for owner occupied housing were down 0.5 per cent from the previous month. Loans for the purchase of new dwellings fell 1.6 per cent in seasonally adjusted terms, while those for buying established housing declined 0.5 per cent.

Having the guidance of an independent real estate network could therefore be invaluable to any investor, especially if you're going to maximise profits. Getting the right mortgage is just the start there are many other crucial decisions you will also need to make along the way.

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