More than a third of potential first home buyers believe they may need to delay buying a property should interest rates start rising, according to new research.
According to Mortgage Choice and Core Data’s Evolving Great Australian Dream white paper, 33.7 per cent of prospective buyers said they would be “increasingly unlikely to buy a home” if rates were to increase.
However, a similar proportion (33.4 per cent) of those surveyed said rate rises would not impact their property buying plans, with 32.9 per admitting they were uncertain as to how rate fluctuations would affect their intentions.
Mortgage Choice CEO John Flavell was concerned that one in three first home buyers expected to potentially have to shelve their acquisition plans, especially as "the fact is, rate rises are inevitable”.
Noting that the majority of lenders have increased the interest rates across their suite of home loan products, Mr Flavell said: “These rate increases have come outside of any rate adjustments by the Reserve Bank of Australia.”
According to the CEO, Mortgage Choice’s lenders had flagged that increased funding pressures had forced them to crank up 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,” he predicted.
However, Mr Flavell said that just because rates were rising and would continue to do so in the near-term, first home buyers shouldn’t be put off.
“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,” he argued.
But, Mr Flavell highlighted the importance of ensuring that any mortgages taken out could still be paid off when "inevitably" interest rates rise.