Rates hikes to hurt first home buyers: Loan Market
First home buyers will be the major casualties if the RBA lifts interest rates, a national survey has found.
According to a recent Loan Market Group survey, 68 per cent of brokers believe rate increases would have the most impact on those looking to enter the property market.
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The survey of 157 brokers found 19 per cent thought investors would be hit hardest while 13 per cent said it would affect those considering upgrading their home.
Loan Market chief operating officer Dean Rushton said an easing of lending criteria from some banks had been encouraging first home buyers back into the market but rate rises could stifle that activity.
“The housing finance market has softened since the RBA lifted the official cash rate three times earlier in the year and there was a relief when the central bank gave borrowers a reprieve this month,” Mr Rushton said.
“There are still expectations of the RBA raising the cash rate from its current level of 4.5 per cent or of the major banks lifting rates independently of the RBA.
“Our brokers are overwhelmingly of the view that this scenario will hit first time buyers hardest.”
Mr Rushton said enquiries from first time buyers had been down for much of the year and their activity had dropped off with the double whammy of the winding back of government grants and rising interest rates.
“Another deterrent for first home owners has been tougher lending criteria from the banks which meant they needed a sizeable deposit to have any prospect of a home loan approval,” he said.
“When you look at the rents paid in capital cities and overlay that with the deposit savings requirements, it’s a significant impact on the household budget.”