Student Loans Significantly Reduce Borrowing Power for Mortgages

HECS debt could reduce borrowing power for a mortgage, according to new research from Compare the Market. The research found that a university student on an annual salary of $125,000 (US$80,800) with a student debt of $26,500 had a reduced borrowing capacity of $95,900. Graduates paying off their HECS on an $100,000 (US$65,000) salary would be $56,300 worse off applying for a loan. Meanwhile, the borrowing capacity of those on an $75,000 income would be reduced by $26,500. Economic director of Compare the Market, David Koch said not paying off student debt could have longer-term consequences. “When the average time to repay a student debt has blown out from 8.2 years in 2011/12 to 9.5 years in 2021/22, most people will continue to pay hundreds or thousands of dollars more due to indexation,” he said....