First home buyers are struggling to crack the property market, new research has found.
According to RateCity’s inaugural First Home Buyer Report, the threat of further interest rate rises is stopping many potential home buyers from taking the plunge.
RateCity’s chief executive officer Damian Smith said home buyers had already been dealt three rate hikes earlier this year, and would struggle to cope with any more upwards rate movements.
“RateCity’s First Home buyer Index shows that it is 18 points tougher for first home buyers nationally in August compared to August 2009,” he said.
“The number one reason is the sharp increase in interest rates. We’ve seen a 1.6 percentage point rise to the benchmark basic variable rate – which is the average of the major four banks including ANZ, Commonwealth Bank, National Australia Bank and Westpac – to 6.78 percent.”
Mr Smith said the end of the government’s First Home Owner’s Boost had also negatively impacted first home buyer demand.
“There’s around $50 million less per month being paid to first home buyers through the First Home Owner’s Grant than there was in August 2009,” Mr Smith said.
“And the number of first home buyers has significantly reduced since last year – now only around 15 percent of mortgages are going to first home buyers, versus an average of 26 percent last year,” said Mr Smith.
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