Allowing first home buyers to access their superannuation to fund property purchases would be “frowned upon” by Australian finance specialists and economists, new research has shown.
Research from comparison website finder.com.au revealed that 80 per cent of experts who surveyed for the recent RBA cash rate survey said they believed allowing first home buyers early access to their superannuation to assist with purchasing property would be “irresponsible”.
Graham Cooke, insights manager at finder.com.au, supported this view and said he believed that enabling first home buyers to dip into their superfunds could “interfere with retirement planning”.
“Allowing young Australians to access their super to facilitate a property purchase could jeopardise their future as it may mean they don’t have enough funds to cover living expenses once they hit retirement age,” he said.
“Additionally, this could add fuel to the fire by creating further demand for housing, thereby ballooning property prices.”
Findings revealed that majority of respondents (11 of 18) said they believed many new owner-occupiers and investors had over-borrowed in the current, low-interest rate setting, particularly for those purchases made in Sydney and Melbourne.
“Some first home buyers have bitten off more than they can chew, which could be an issue with rising rates,” said Mr Cooke.
“However, disciplined budgeting and a clear repayment schedule will help borrowers manage their debt effectively.”
Mr Cooke added that APRA’s recent move to tighten mortgage rules, combined with recent bank hikes targeted primarily towards investors, were likely to cool the flourishing housing market.
“In particular, APRA’s decision to limit the flow of new interest-only lending to 30 per cent of new residential mortgages will have changed the market drastically,” he said.
Mr Cooke concluded by saying he believed mortgage holders should “brace themselves” for rising interest rates in the coming future.
“The cash rate hasn’t shifted in recent months, but it’s not becoming clear that the next move will be in a positive direction as the bank starts to tighten monetary policy.
“Variable mortgage holders should brace themselves and revise their household budget to ensure they can cope with higher mortgage repayments,” he concluded.
[Related: RBA makes cash rate announcement]