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Rates close to tipping point for first time homebuyers

By Luke Cornish | 05 Mar 2010

More than a quarter of people looking to buy their first home in the next two years would give up on that dream if interest rates were to rise by just two percentage points in the next two years, according to results from the 2010 First Homebuyers Survey.

"Although a large portion of first time buyers-to-be are prepared for interest rate rises and appear to be quite knowledgeable about the market, a significant proportion - 28% - say they'll back out of buying if rates increase by up to two percentage points," senior corporate affairs manager, Kristy Sheppard said. "Savvy mortgage holders give themselves at least that as a repayment buffer each month so these buyers should think very carefully about entering the market."

This year's annual survey showed that 32% of respondents plan on buying their first property on their own, compared to 28% in last year's survey. This has been cited as a possible reason that small rate rises could have a big impact on the willingness of buyers to take the plunge. However, 78% were planning to make lifestyle sacrifices in order to purchase - up from 71% in 2009.

Source: Broker News