Home hunters would take even higher mortgage rates to buy sooner
Surprising new research found that one in two Australians would choose take on a steeper interest rate if it meant owning their home more quickly.
Pepper Money’s latest Money Mindset Report – Borrower Knowledge Gap has unveiled a significant gap between Australians’ home ownership aspirations and their financial reality.
As property prices continue to rise and the cash rate shows no signs of declining, would-be home owners are growing increasingly desperate in their bid to get their foot on the property ladder.
The vast majority of survey participants stated that they continue to dream of owning their own home one day, and a massive 89 per cent believed that home ownership remains part of the Australian dream.
Nevertheless, many respondents said they feel out of their depth when it comes to the difficult task of saving for a deposit, with 70 per cent revealing they are unsure when they will have enough savings for the home they want.
In fact, only one in five Australians said they are confident knowing when they will have saved up an adequate deposit to buy.
Mario Rehayem, CEO of Pepper Money, stated that “saving for your deposit is an important part of the home ownership journey, but our research shows that many are doing so without understanding how much is actually enough”.
He attributed much of this confusion to economic uncertainty in recent years, particularly the many cash rate hikes that have taken place over the last 18 months.
“With the cash rate jumping to 4.35 per cent from a record low 0.1 per cent at the start of May 2022 and economists seemingly divided on what the future holds for rates, it’s little wonder 73 per cent of respondents simply don’t feel confident about when they will be able to buy their first or next home,” he said.
“When it feels like the goalposts are constantly moving, it can be hard to measure how far long in your home ownership journey you really are,” he explained.
Perhaps most surprisingly of all, the survey results found that 53 per cent of respondents would be willing to accept a higher mortgage rate if it meant being able to a secure a loan more quickly.
According to Mr Rehayem, many borrowers who apply for banks’ headline interest rates are told their application is unsuccessful, but are not told why. He believes that this puts a dampener on many aspiring buyers’ hopes, and dissuades them from seeking out alternative options.
This sentiment is reflected in the data, with 52 per cent of respondents reporting that they felt unsure they would be able to secure the home loan amount that they were once offered in the past.
“There is a prevailing narrative out there that the home ownership dream is now unattainable for many,” said Mr Rehayem.
“It’s understandable that Australians may feel that they are stuck in a never-ending savings cycle.”
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