FIRST-homebuyers in NSW are taking on almost 25 per cent more debt than when the Reserve Bank began cutting interest rates as they scramble for a foot in the door of soaring house prices.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
They are borrowing $68,400 more than they were 3½ years ago, when Reserve governor Glenn Stevens started rate cuts that have put a rocket under house prices.
The average new loan for a first-home buyer has risen 23 per cent in this period to $362,000, outpacing growth in wages.
The average loan size in NSW has jumped 18 per cent since late 2011, to $384,500.
The surge comes as borrowers face fresh warnings not to overstretch in a market driven by investors betting on capital gains.
Prices have surged 15 per cent in a year and 49 per cent since the Reserve began cutting.
More than 40 Sydney suburbs have joined the million-dollar median club in six months — one in three now has a median of $1 million.
CoreLogic RP Data analyst Cameron Kusher said buyers needed to ask whether they could afford their debts when interest rates rose.
“A mortgage is usually for 25 or 30 years,” Mr Kusher said.
“In a couple of years, as rates rise, can you still afford to repay the mortgage?”
The lift in loan size is more than double the 8.8 per cent increase in average NSW wages in the same period.
Economist Paul Bloxham said prices were likely to climb about 10 per cent before a slowdown of 2 per cent next year.
