New research by HomeStart Finance found that interest rates had the least impact on motivating FHBs to apply for a home loan, while saving enough money for a deposit and affordable property prices are the two biggest motivators.
HomeStart Finance CEO John Oliver said while the view that low interest rates are good for FHBs is true “to a degree”, they do little to help overcome the barriers to buying a home that exist upfront.
“Low interest rates mean little if you don’t have the deposit to obtain finance for a loan, or if there is a gap between how much you can borrow and the price of property,” he said.
“Although we’ve been in an extended period of low interest rates, unfortunately – for many first home buyers – the dream of home ownership is no closer.
“Another potential issue of low interest rates is they can increase investor demand, which in turn has been said to drive property prices even further out of reach of first home buyers,” he said.
The other drawback of low interest rates for FHBs, according to Mr Oliver, is that they earn less interest on their savings accounts, making it even harder to save for a deposit.