First homebuyers may give up if rates keep rising
More than one quarter of Australians looking to buy their first home in the next two years will give up on the purchase if interest rates rise by another two percentage points, a new survey has shown.
The 2010 Mortgage Choice First Homebuyers Survey also revealed that an increasing number of potential first homebuyers intend to buy on their own. It showed this was the plan for 32 per cent of respondents, compared to 28 per cent in the 2009 survey.
First homebuyers’ main motivation to purchase property in the next two years was to set themselves up financially for the future (72 per cent of respondents).
Mortgage Choice senior corporate affairs manager Kristy Sheppard offered a warning to Australians who wish to compare home loans.
She said: "Although a large portion of first time buyers-to-be are prepared for interest rate rises and appear to be quite knowledgeable about the market, a significant proportion – 28 per cent – say they’ll back out of buying if rates increase by up to two percentage points.
"Savvy mortgage holders give themselves at least that as a repayment buffer each month so these buyers should think very carefully about entering the market."
This week, Housing Industry Association senior economist Ben Phillips said the removal of the first home buyers boost and recent interest rate increases had already caused a significant fall in affordability, news.com.au reported.
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