Was this helpful?
  • Currently 2.8/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
   Rating 2.8/5
Share thisShare Send to Facebook Tweet this Digg this

We check the 'Pulse' - Will First Home Buyers survive Rising Interest Rates?
The second edition of RAMS First Home Buyers’ Pulse Check looked at a number of key issues, such as:

  • The key drivers that lead people to look for their first home
  • The type of home they are looking for and their preferred location
  • The influence of the Boost to the First Home Owners Grant and consecutive interest rate reductions on first home buyers
  • What home owners and home seekers believe will happen to interest rates in the next 2 years and how they will cope with any potential increases
  • How home owners manage their mortgage
  • The sort of advice that home owners would give to those yet to find their first home

Amongst the key findings of the report were the following:

  • While in the first edition of the RAMS First Home Buyers’ Pulse Survey that 7 in 10 home seekers advised that the First Home Owners Grant Boost and interest rate reductions either ‘moderately influenced’ or ‘strongly influenced their decision to look for their first home, in the second study conducted in August, this figure dropped to less than 5 in 10 home seekers.
  • Only 4 in 10 first home seekers advised that they would be trying to secure their first home before the First Home Owners Grant Boost finishes at the end of December.
  • 7 in 10 home owners have a 100% variable rate mortgage.
  • 5 in 10 home seekers were looking to split their mortgage into a fixed rate and variable rate loan combination, taking advantage of the current low interest rates.
  • · Home owners are still working hard to pay off their mortgage before their loan term ends, with many aiming to do so within 15 years. In direct contrast however, first home seekers are more conservative in their intentions, with only 48% feeling certain that they will be able to pay off their loan early.
  • Over half of all respondents stressed that a change in interest rates, for example an increase in rates to around 9% to 10% p.a., which were present only less than 12 months ago, would mean that first home buyers and seekers would have to significantly tighten their household budget.
  • Home seekers had a relatively positive outlook when it came to anticipating interest rate changes, with many believing that interest rates would stay low in 2009 and well into 2010.


  
Drawing on the responses made in the survey in relation to interest rates, it is worth noting that having a ‘short sighted’ view of the future when it comes to taking out a home loan is not a good practice.

First home buyers, in particular, need to take into account the fact that interest rates will fluctuate over the years, as is natural in any economy. When taking out a home loan, it is important to make sure that the mortgage repayments for your home loan are affordable at their current rate and remain manageable should interest rates rise at any time.

While the Reserve Bank announced in early September that interest rates would likely remain where they are for the next month, many economists and media commentators are predicting that they may rise in the not-too-distant future.

This being the case, now is the time for all home owners to make sure that, if they have not already done so, they establish a budget which they are able to adhere to - now and in the future.

Talk with a RAMS Consultant today to find out more about the current interest rates and loans on offer – and source some advice on how to plan your finances in line with your lifestyle today and for tomorrow.