FHBs active and comfortable

Posted on 19/11/2015  
FHBs active and comfortable

First-time buyers are highly active in the market and are very comfortable with their mortgage commitments, contrary to the image portrayed in mainstream media.

The quarterly Australian Residential Property Survey from National Australia Bank has found that 26.2% of sales of established properties and 28.9% of sales of new properties are being made to first-time buyers.

The NAB report, unlike other less credible sources like the ABS, takes into account that not all first-timers buy homes. A rising number buy investment properties as a first purchase.

According to NAB, 15.7% of established properties and 16.4% of new properties are being sold to first-timers as home-buyers. In addition, 10.5% of established properties and 12.5% of new properties are being sold to first-time buyers as investors.

First-time buyers as investors are particularly active in New South Wales, Victoria and Queensland. (To find the best places to buy in Sydney, Melbourne and Brisbane, click on the relevant state to learn more.)

They’re a sizeable proportion of the market, but this is seldom acknowledged in media because it contradicts the general theme that the Great Australian Dream is dead because youngsters (they claim) are priced out of the market.

Research from Mortgage Choice has found that most first-home buyers are comfortable with their mortgages – and most could cope with eight interest rate rises.

According to its annual First Home Owner Survey, 25.3% say they could comfortably afford their loan payments even if interest rates rose 4 percentage points. Another 36.8% said they could afford at least a 2 percentage points rise in their interest rates.

This means that almost two-thirds could accommodate interest rate rises of at least two percentage points.

Mortgage Choice CEO John Flavell says: “Given that interest rates generally rise in increments of about 25 basis points (0.25%), the majority of first-home owners believe they could comfortably afford at least eight interest rate rises.”

Six out of ten first-home owners are making additional repayments on a regular basis, according to the Mortgage Choice research.

“They understand that interest rates are sitting at historical lows and as such they are keen to pay off as much of their mortgage as possible while their rates and monthly repayments are low,” Flavell says.

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