An Australian mother has sparked controversy after claiming her six-figure income is not enough for her family of three to live “comfortably”.
Lou, from That Money Mum, told Daily Mail Australia her family had to adjust their spending habits after rising interest rates doubled their mortgage payments.
“Two years ago, my husband and I were making $150,000 a year,” said the Melbourne mother.
“We didn't have kids, so our mortgage was $800, and we could easily save $1,000 every two weeks without trying too hard.
“In the last two years, we had a child, I went part-time, and our mortgage increased by $800 a month.
“Our car insurance went from $800 to $1,100, our business goes up $50 every quarter, we get more Netflix, we get more Spotify, and we can't even feel like buying groceries. yeah.”
Lu added that the increased financial burden means families “have to be frugal.”
“We’re counting every penny we have to make sure we have some left over to put toward the mortgage,” she said.
“$140,000 feels crazy to say because it sounds like a huge number, but for three people, two adults and a baby, with a mortgage in this economy, it's not a huge amount at all. I don’t feel it.”
A person earning $140,000 paying off an average $600,000 mortgage is in mortgage stress, where the borrower is spending more than 30 percent of their paycheck on monthly payments.
That's because annual repayments of $46,416 are equivalent to 33.2% of a high-income earner's salary.
This is a real burden for a family paying off a $750,000 home with a 20% down payment after 13 interest rate rises in 18 months pushed the Reserve Bank cash rate to a 12-year high of 4.35%. means that it becomes larger.
Australian mother sparks controversy after claiming her $140,000 income isn't enough for her family of three to live “comfortably” (stock image)
Australian borrowers are now paying 59% more on their mortgages compared to three years ago, with financial markets expecting further interest rate increases in 2024.
Lou defined comfort as being able to enjoy some luxuries without worrying about finances.
“We're lucky. I think we need to make more, like $170,000, to be comfortable, but that depends on the debt,” she said.
“It would be more comfortable without a mortgage.”
Hundreds of Australian mothers agreed, saying they were struggling to make ends meet that could have bought them a “rich life” a few years ago.
“I have $100,000. I don't have kids so I struggle with the balance between saving and having fun. $140,000 is by no means a comfortable income for more than 3 people,” said one person. Told.
Another wrote: “$140,000 is the new $80,000.” Her husband and I, together with our four children, live on $200,000. We live on the harsh side of comfort. ”
A third person answered, “Family of four.” Revenue is $260,000. Although we are comfortable, we do not live a luxurious life. Five years ago we would have felt like royalty. ”
Another said, “I live on about $170,000 with my family of four and two pets, but I feel the same way I did five years ago when I was on maternity leave and making $100,000.”
But some say $140,000 is enough to get them through the cost of living crisis.
“I'm a single mom with three kids and I'm fine with $46,000 a year.”
For borrowers with an average $600,000 mortgage, monthly repayments rose from $2,431 to $3,868, an increase of $17,244 over the year (home pictured in Clontarf, north of Brisbane)
A second added: “We are a family of three on $150,000 a year so we have plenty of room to save for vacations and renovations.”
“I think it depends on the debt and the mortgage. It makes a big difference. We don't have a car loan or debt, and our mortgage is $2,000 a month.”
“I'm a single mom on $55,000,” said a third. But somehow I get it to work. And I managed to save up some money, and her daughter gets by with nothing. ”
Australian borrowers are now paying 59% more on their mortgages than they were three years ago, and financial markets expect further interest rate increases in 2024.
Back in April 2021, Commonwealth Bank, Australia's largest housing lender, was offering a variable mortgage rate of 2.69%.
But after three years, variable rate borrowers are now paying 6.69%.
For borrowers with an average $600,000 mortgage, monthly payments increased from $2,431 to $3,868, an increase of $17,244 over the year.
For someone with an $800,000 mortgage (buying a $1 million home with a 20% mortgage down payment), the monthly payment would increase from $3,241 to $5,157.
This equates to a $22,992 jump in annual mortgage costs.
And despite rising interest rates, house prices are soaring in Australia's capitals as immigration reaches record levels, posing an additional hurdle for those struggling to buy a home.
Median house prices in Sydney have increased by 10.7% in the past year, compared to 15.9% in Brisbane and 20% in Perth.
