Whilst investors have dominated the news, one-third of first home buyers say rate rises are putting them off buying altogether
Whilst investors have dominated the news, one-third of first home buyers say rate rises are putting them off buying altogether
One-third of potential first home buyers say they would be “increasingly unlikely to buy a home” is interest rates started to climb, according to a newly released report by Mortgage Choice and Core Data. The Evolving Great Australian Dream whitepaper found that 33.7% would be put off buying, 33.4% said a rate rise would not affect their buying intentions and a remaining 32.9% said they were unsure how rate adjustments would impact their property plans.
28% of Australian millennials currently own a home, but 83% intend to buy one in the next 5 years, according to HSBC
The finding comes as figures from CANSTAR show 19 lenders increased their standard variable rate in the month of March. The average SVR is now 4.47%; the average basic variable rate is 4.25%. The fact that rate rises were putting off FHBs was concerning, explained Mortgage Choice CEO John Flavell: “the fact is, rate rises are inevitable. In fact, over the past few weeks, the majority of lenders have increased the interest rates across their suite of home loan products.”
“According to our lenders, increased funding pressures have forced them to lift their rates. Looking ahead, I wouldn’t be surprised to see our financial institutions continue to increase their home loan rates out of cycle with the Reserve Bank.” Interest rates are still sitting at historically low levels, Flavell added, making the cost of borrowing ‘incredibly affordable’.
Nevertheless, borrowing is becoming less affordable, according to Adelaide Bank and REIA’s Housing Affordability Report. It found the proportion of income required to meet loan repayments increasing by 0.9% in the December quarter of 2016 to 30.4% overall, although the proportion for NSW was far higher at 37%. Adelaide Bank general manager Damian Percy commented that “housing affordability is an issue that has apparently crept up on our elected representatives with all the speed of a glacier over many years.”
Further misery is on the way for first home buyers as banks look to increase capital levels. Young affluent borrowers are among the groups that would be hit hardest if banks need to raise interest rates, JP Morgan’s Australian Mortgage Industry Report found, with ‘rentvestors’ particularly affected.
One-third of potential first home buyers say they would be “increasingly unlikely to buy a home” is interest rates started to climb, according to a newly released report by Mortgage Choice and Core Data. The Evolving Great Australian Dream whitepaper found that 33.7% would be put off buying, 33.4% said a rate rise would not affect their buying intentions and a remaining 32.9% said they were unsure how rate adjustments would impact their property plans.
28% of Australian millennials currently own a home, but 83% intend to buy one in the next 5 years, according to HSBC
The finding comes as figures from CANSTAR show 19 lenders increased their standard variable rate in the month of March. The average SVR is now 4.47%; the average basic variable rate is 4.25%. The fact that rate rises were putting off FHBs was concerning, explained Mortgage Choice CEO John Flavell: “the fact is, rate rises are inevitable. In fact, over the past few weeks, the majority of lenders have increased the interest rates across their suite of home loan products.”
“According to our lenders, increased funding pressures have forced them to lift their rates. Looking ahead, I wouldn’t be surprised to see our financial institutions continue to increase their home loan rates out of cycle with the Reserve Bank.” Interest rates are still sitting at historically low levels, Flavell added, making the cost of borrowing ‘incredibly affordable’.
Nevertheless, borrowing is becoming less affordable, according to Adelaide Bank and REIA’s Housing Affordability Report. It found the proportion of income required to meet loan repayments increasing by 0.9% in the December quarter of 2016 to 30.4% overall, although the proportion for NSW was far higher at 37%. Adelaide Bank general manager Damian Percy commented that “housing affordability is an issue that has apparently crept up on our elected representatives with all the speed of a glacier over many years.”
Further misery is on the way for first home buyers as banks look to increase capital levels. Young affluent borrowers are among the groups that would be hit hardest if banks need to raise interest rates, JP Morgan’s Australian Mortgage Industry Report found, with ‘rentvestors’ particularly affected.
