Pressure mounts for first time buyers but home ownership is achievable: Genworth
The Reserve Bank of Australia (RBA) left the official cash rate on hold at 4.5 per cent for the fourth consecutive month yesterday – a result of ongoing turbulence in international economies as well as political uncertainty at home.
While this augurs well for interest rates on home loans – i.e. for those of us that have mortgages on current property – the outlook for actually getting into the market is not so peachy.
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According to the Genworth Homebuyer Confidence Index, released yesterday, rising interest rates and the rising cost of living have become a key concern for first home buyers.
Genworth is a lender’s mortgage insurance provider, and regularly undertakes research into the lending habits of Australians to determine their capacity to not only service a mortgage, but the challenges they face in securing one.
The report revealed that just 25 per cent of Australians think now is a good time to buy a home, compared to 50 per cent one year ago.
Speaking at the launch of the index yesterday, Genworth acting CEO Paul Caputo, said that while property prices were likely to increase only modestly in the next couple of years, rising rents, higher interest rates and the increasing cost of living would all put pressure on would-be home buyers looking to save for a deposit.
That said, prospective home buyers should not discard their property aspirations, but simply work smarter in order to save a deposit sooner.
This might mean moving home with the parents, or cutting back spending on things such as lunches, coffees and weekend drinking sessions. It may also involve working smart with your savings by directing them to a high interest savings account.
The return of higher LVR loans also means some home buyers will be able to get into the market with a deposit of just 5 per cent. On a $400,000 property, for example, this equates to $20,000, not an unachievable sum for many of us to save – if you put your mind to it.
While the forces of interest rates and rising living costs might be against you, property ownership is still possible, it just requires a bit of smart play.