Media Release warns property hunters: Don’t take on too much risk

  • Almost double the number of Australians searching for interest-only home loans on
  • research shows average home loan size increased by $24,000 since last year
  • Average loan size up by $24,000, with NSW seeing biggest rise of $30,700 since last year

September 27, 2014, SYDNEY – One of Australia's biggest comparison websites is warning property hunters about the dangers of taking on too much risk, following a spike in interest-only home loans and bigger loan sizes.

There were almost double (81%) the number of Australians looking for interest-only home loans on since last year (30 days to September 25, 2014 compared to the same time last year).

The Reserve Bank of Australia also released a Financial Stability report this week, which showed concerns about the higher number of interest-only home loans financed, as well as home loan sizes have increased on average.

Over one in three home loans financed (35 percent) were interest-only since the March quarter to June quarter 2014, the highest level since this data was collected (2008) according to a analysis of Australian Prudential Regulation Authority (APRA) figures. also found that the average home loan size is at a record high of $319,000 – $24,000 higher than last year.
Michelle Hutchison, Money Expert at, said she is concerned that borrowers are taking on too much risk before interest rates rise.

“It's a real concern to see borrowers taking on more risk because interest rates are at record lows and expected to rise next year, which means borrowers can find themselves in financial trouble if they take on more debt than they can afford.

“For instance, if interest rates rise back to historical average levels of 5 percent, it would cost borrowers with a $300,000 home loan an extra $400 per month or about $4,800 in one year.

“It will hit them twice as hard if they move from interest-only to principal and interest repayments.

“Interest-only home loans can end up costing you a lot more in the long-run and adds higher risk to your financial situation, particularly first home buyers. With lower deposits, they are also at risk of negative equity if their property value falls and if they need to sell up they are at risk of owing the bank money after closing the loan,” said Mrs Hutchison.

Difference in average home loan sizes in each state compared to last year:

StateJuly 2014July 2013Difference
National average $319,000$295,000+$24,000

source:, Australian Bureau of Statistics Housing Finance (original)


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The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on's review pages for the current correct values.

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