4 Sensitivity Tests on Average Earnings

Following on from the last section I am going to assess the capacity of borrowers given the average wages. I am focusing on servicing the debt rather than assessing the asset they are purchasing. - Which I acknowledge requires it’s own due diligence. In part because granular data for this is behind a pay wall, I’ll not risk the potential privacy infringements.

I will assume 2025–26 resident brackets with Medicare levy 2%; include LITO phase-out to $66,667 (which will have small effect at AWOTE levels but included for accuracy) Low Income Tac Offset, ATO. I will consider 30% of net income a soft parameter for potential distress. The wage data I am using is flawed, it is not the median and I do not have a distribution. Savings and superannuation are not considered, this is a generalisation of affordability. - A sensitivity test rather than a stress test.

Gross to Net Income
date_lbl gross_week gross_annual net_annual avg_tax_rate
Mining 2025 May 3174.5 $165,074 $119,357 27.7%
Information Media and Telecommunications 2025 May 2560.7 $133,156 $99,758 25.1%
Electricity, Gas, Water and Waste Services 2025 May 2366.8 $123,074 $92,902 24.5%
Professional, Scientific and Technical Services 2025 May 2327.6 $121,035 $91,516 24.4%
Financial and Insurance Services 2025 May 2323.7 $120,832 $91,378 24.4%
Public Administration and Safety 2025 May 2103.3 $109,372 $83,585 23.6%
Education and Training 2025 May 2098.3 $109,112 $83,408 23.6%
Health Care and Social Assistance 2025 May 1978.8 $102,898 $79,182 23.0%
Construction 2025 May 1957.6 $101,795 $78,433 23.0%
Transport, Postal and Warehousing 2025 May 1925.7 $100,136 $77,305 22.8%
Wholesale Trade 2025 May 1883.6 $97,947 $75,816 22.6%
Rental, Hiring and Real Estate Services 2025 May 1875.5 $97,526 $75,530 22.6%
Administrative and Support Services 2025 May 1818.4 $94,557 $73,511 22.3%
Arts and Recreation Services 2025 May 1802.5 $93,730 $72,948 22.2%
Manufacturing 2025 May 1788.7 $93,012 $72,460 22.1%
Other Services 2025 May 1521.2 $79,102 $63,002 20.4%
Retail Trade 2025 May 1504.4 $78,229 $62,408 20.2%
Accommodation and Food Services 2025 May 1459.7 $75,904 $60,827 19.9%


The effective tax rates shown in the Gross to Net Income table (c. 23% at $100k, rising to ~28% at $165k) are relatively consistent with the legislated resident income tax schedule and Medicare levy, where marginal rates step from 30% above $45k to 37% above $135k and 45% above $190k Tax rates – Australian resident. The ATO’s Taxation Statistics provide overall average taxable income for all taxpayers, implying an overall average effective tax rate of ~32%, which includes lower earners and doesn’t isolate the $100–165k range ATO Individuals statistics for Taxation statistics 2022–23 (July 2025). While it may be on the lower end of what I expected net incomes to be, for the purpose of generalisation the tax rate calculated will suffice.


Recall the APRA Prudential Practice Guide from previous sections.

  • Assessment buffer: ADIs must assess serviceability at the higher of:
    1. the loan’s interest rate + 3 percentage points, or
    2. an internal floor rate (7 to 8%). - Protecting against particularly low levels of interest.
  • Income verification: stable income only, discounted if variable.
  • Living expenses: must reflect borrower’s actuals where higher.
  • Net Income Surplus (NIS): post-assessment income must remain positive.

New owner-occupier mortgage rates for new loans are currently sitting around the mid-5s: the RBA’s “Lenders’ rates” table shows 5.75% for owner-occupier new loans in June 2025 RBA. Advertised rates at the time of writing are about 5.35%. - Meeting in the middle interset rates of 5.5% are representative for the below. According to Cotality the average unit price nationwide is approx $835,000 Cotality - Home Value Index (July 2025). With ~50% of LVRs for Owner Occupied mortgages falling into the 60% to 80% bucket that would represent a 500k to 650k mortgage.


Mortgage Burden by Average Industry Earnings - Using average net earnings by industry and testing repayments at offered rates, the APRA buffer pushes assessment to ~8–9%. At today’s pricing (mid-5%s for new loans), single-income borrowers below $100–110k breach 30-40% income well under loan requirements for average units.


In the above sensitivity, the Miner is the only real candidate that can afford an average home. - At that, the 3% buffer means that they approach 40% of net income on mortgage repayments on a 500k loan. - Which would represent a 60% LVR on the average property nationwide.

Owners with a mortgage are predominantly couple households; one-person mortgagors are a small minority of mortgaged households. The RBA notes that dual-income mortgages feature prominently in liaison and stress analysis, consistent with couple dominance among mortgage holders RBA - FSR (September 2024).

Household size, existing debt, savings/asset buffers and likely bank specific serviceability specifics all come in to play for a genuine stress test. Without making a generalisation example trivial in the absence of micro data, I will move.