Thursday, October 18, 2012

Henderson Poverty Index And Household Expenditure Measure

Have you heard of the HPI (Henderson Poverty Index) or HEM (Household Expenditure Measure)?

HPI and HEM are the living expense amounts that lenders use in their mortgage calculators to see how much you can borrow.

Some home loan lenders have started using the HEM to calculate the maximum size loan you can borrow based on your income. Using HEM in calculations means individuals can borrow more while it's the inverse for couples, that is couples can borrow less when the HEM is used.

When you apply for a mortgage loan, the paperwork will ask you to state your living expenses and how much you spend. With those figures, they will compare it to the appropriate category in the tables below and take the higher figure to use in their mortgage calculators.

Living expenses for single adults

Household Segments HPI HEM
No Dependents $1250 $1105
1 Dependent $1717 $1430
2 Dependents $2159 $1560
3 Dependents $2601 $1889

Living expenses for couples

Household Segments HPI HEM
No Dependent $1817 $2032
1 Dependent $2284 $2583
2 Dependents $2726 $2704
3 Dependents $3168 $3137

If you're single, is $1105 per month sufficient to meet your living expenses?
If you're a couple, is $2032 per month sufficient to meet your living expenses?



  1. Where does the HEM come from? Who "calculates" these amounts???

    1. HEM is "calculated" by the Australian Bureau of Statistics (ABS) who performs the ABS Household Expense Surveys in order to arrive at those amounts.

  2. Hi, could you please provide a link to the ABS site that publishes the latest HEM figures?

    I have looked through the ABS - Household Expense Surveys and do not see these figures.

  3. This is incorrect. The HEM is provided by The Melbourne Institute of Applied Economic and Social Research. These figures are reviewed and published quarterly

    1. I emailed the site where the original source info was obtained and haven't received a response so I published your comment. Had to verify that your comment wasn't just spruiking your website just to obtain a better SEO ranking.

  4. It is incorrect as the article is published in 2012... Your comments are at least 1.5 years later... Mortgage house prices increase by 3 % point per year let alone living expenses and inflation.

    1. Mortgage house prices increase at various rates depending on location and property type. For new readers, yes this article was written many years ago, so figures change due to inflation.