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Lawyers’ monthly mortgage repayments have risen, on average, by $1,100
Ahead of next week’s RBA cash rate call, new research details just how much more legal professionals are paying per month on their home loans as a result of rate rises in the past year. Amid a cost-of-living crisis, rising inflation and the likelihood that lawyers will not get inflated salary bumps like last year, such rises in mortgage repayments will be hurting lawyers’ hip pockets.
Jerome Doraisamy
Mortgage broking firm for lawyers, Legal Home Loans (LHL), has published its Unveiling the Legal Advantage report, which aims to shed light on home loan trends for practitioners across the country. The data for the report was drawn from 776 applicants across 610 home loan records, with the average age of lawyers for the data being 38 years and with a 51-49 gender split between females and males, respectively.
“It is common knowledge that qualified professions, including lawyers and accountants, generally possess greater earning potential,” she outlined.
“However, witnessing the statistical disparities in home ownership between these professionals and the typical Australian population is incredibly interesting.”
According to the research, the average repayments for lawyers increased, from January last year to this January, from $3,189 to $4,289 — an increase of $1,100.
Since January 2023, there have, of course, been a handful of additional rate rises since the first of 11 in May 2022 — the most recent of which was last month. As such, it is likely that the monthly repayments lawyers are experiencing will continue to rise, assuming they haven’t done so already.
The finding follows those from the Australasian Legal Practice Management Association (ALPMA), which recently released its annual Australian Legal Industry HR Issues and Salary Survey. That survey found — as reported by Lawyers Weekly in mid-May — that while many law firms across Australia remain prepared to negotiate salary increases that are above the consumer price index (CPI), the number of such firms has dropped from over one in three (36 per cent) in 2022 to just under three in 10 (28 per cent) this year.
The LHL research also found that the average loan size for lawyers has increased by nearly $30,000, going from $846,011 to $874,567, for a rise of $28,556.
Moreover, the average rate increase for legal professionals is 1.96 per cent, going from 2.48 per cent in January 2022 to 4.44 per cent at the start of this year.
Such hits to the hip pocket for legal professionals with home loans, together with rising inflation and cost of living, as well as the decreased likelihood of a bloated salary bump in the new financial year (albeit potentially in favour of workplace incentives, as recently hypothesised by Naiman Clarke director Elvira Naiman), will likely hurt lawyers.
In its report, Legal Home Loans wrote that — as a consequence of the near 2 per cent increase in interest rates — the loan-to-value ratio (LVR) for loans settled in January 2023 dropped by 5 per cent, with more participants opting to provide a larger deposit, so as to mitigate the impacts of those rising interest rates.
“It is also important to those that the 2 per cent increase is significantly lower compared to the overall RBA cash rate rise, mainly because certain participants were able to obtain better discounts or have fixed interest rates,” it posited.
“This highlights the increased importance for lawyers to leverage their professional status and the associated benefits to enhance their borrowing capacity and secure their dream homes, staying ahead of the average Australian.”
The report also details how expensive lawyers’ properties are relative to the general Australian population, as well as the age at which lawyers get on the property ladder. Lawyers Weekly will publish these findings in the near future.
MORE TO COME.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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