 45% of income goes to mortgage repayments
The intensity of interest rate hike is giving first home owners continuing worry while 45 percent of their income are going to their mortgage repayments.
Though demand from first home owners begins to diminish the upgraders and investors are not leaving, making auction unyielding in the market, according to industry expert Martin North, executive director industry group, Fujitsu Australia & New Zealand.
North said that established owners are spending between 25-30% of their income to repayments – a big difference from the 45% spent by first home owners. He confirmed that the hike in interest rates indeed have frightened new buyers to acquire properties despite that they have been eyeing assets for almost a year already.
"You have to remember that first home buyers will normally reach as far as they can because they have to in order to get into the market, but they've never quite had to stretch themselves as much as they are now. In fact, 30% of the people who have tried to enter the market now believe it is beyond their reach." North said.
North gave two reasons, firstly, the increasing interest rates, and second is the escalating price of houses which consequently pushes up the amount of an average loan.
Putting those two reasons together, people are not anymore willing to enter the market. Among the major impacts, according to North, is that first home buyers will go for refinancing.
If first home owners will sell their property, it will give them a very minimal gain because they still have to pay for the equity, North explained. He said it would be practical to scrutinize first the current finance atmosphere before taking on commitments such as buying or refinancing their homes.
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