One in five may not be able to afford home loans

Thursday 03 September 2009

Article by Mozo

Property owners have claimed they may not be able to afford repayments if home loans rates increase.

This is according to new research in response to the Reserve Bank of Australia (RBA) stating interest rates will rise over the coming months.

A study, conducted by the Loan Market Group, found one in five people said they felt they would struggle if the interest rate increased to five per cent, which may be relevant to those looking for low interest home loans.

This could hike the payments on an average $340,000 mortgage by $450 a month.

However, the survey found that 38 per cent said they could afford $250 extra and 27 per cent said they could pay up to $500 more.

John Kolenda, Loan Market Group executive director, said: "It should be a concern to the RBA and to the federal government that 57 per cent of respondents said they can’t afford rates to go up another two percentage points."

The RBS voted yesterday (September 2nd) to keep the interest rate at three per cent for the fifth month in a row.

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