Buyers biting off more than they can chew?

Monday 11 May 2009

Article by Mozo

As many as one in five first-home buyers may find it difficult to repay their home loan debt, a new poll has found.

The Australian reports that while Australians are packing out auction houses in a bid to take advantage of the extended first-home buyers grant before it expires at the end of June, many are signing up to a home loan they cannot afford to repay.

Research carried out by Datamonitor has shown that 21 per cent of people who have brought a home in the last year imagine they will have difficulty making home loan payments within the next five years.

"These findings have important implications for the Reserve Bank’s attempts to stimulate the economy by lowering the cash rate," said Datamonitor senior analyst Peter Ingemarsson.

Datamonitor has also exposed figures that suggest that many first-home buyers may be getting short changed by the grants, as data suggests that they are pushing up house prices considerably.

The average price of a house in March 2009 stood at $281,000, up $50,000 from prices a year before.

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