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1 in 3 FHBs unlikely to buy home if rates rise: research

More than 30% of potential first home buyers have said they may have to put their property plans on the back-burner if interest rates rise, new research has revealed.


April 06, 2017

More than 30% of potential first home buyers have said they may have to put their property plans on the back-burner if interest rates rise, new research has revealed.

According to Mortgage Choice and Core Data's Evolving Great Australian Dream whitepaper, 33.7% of prospective buyers said they would be “increasingly unlikely to buy a home” if rates started to climb.

For 33.4% of respondents, rate rises would not affect their property purchasing intentions, while the remaining 32.9% said they were unsure how rate adjustments may impact their property plans.

“The fact that a rate increase would encourage more than one in three first home buyers to put their property plans on the backburner concerns me,” Mortgage Choice chief executive officer John Flavell said.

“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.

“These rate increases have come outside of any rate adjustments by the Reserve Bank of Australia.

“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.

“Of course, just because rates are rising and will continue to do so over the coming months and years, first home buyers shouldn't be deterred.

“The reality is, even with the latest rate increases, mortgage interest rates are still sitting at historically low levels, which ensures the cost of borrowing is still incredibly affordable.”

Mr Flavell said it was important for first home buyers to do their research when applying for a home loan.

“When you are applying for a home loan, you should always dot your ‘i's' and cross your ‘t's' so you understand what you're signing up for,” he said.

“It is important to check that you are not only able to service a mortgage at current interest rates, but at increased rates, which will be inevitable.

“You should also consider your current and future personal circumstances, as this will impact your ability to repay the mortgage.

“A qualified mortgage professional can walk you through your options and recommend the best product to suit your current and future needs.”

Mr Flavell said brokers were highly regulated and worked hard to ensure customers were placed in a home loan that suited their unique goals and financial circumstances.

“At Mortgage Choice, we always factor in a financial buffer, as do our lender partners. This financial buffer is usually several percentage points higher than a customers' interest rate. By doing this, we make sure all customers can not only comfortably afford their mortgage repayments now, but they can also afford their repayments if and when interest rates rise,” he said.

“Having a customer in a home loan they cannot afford doesn't benefit anyone. It's for this reason why, at Mortgage Choice, we ensure every customer is put in the right financial product for their circumstances.”

Click here to download a copy of the release 


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