This article is from the Australian Property Journal archive
WHILST most borrowers are currently meeting their mortgage repayments, the number of homeowners who expect to experience difficulties in the next 12 months has risen, according to the Genworth Financial Homebuyer Confidence Index.
The GHCI is based on consumer attitudinal data collected over the last five years and shows that homebuyer confidence is back to pre-Global Financial Crisis levels. The index reached 99.1 in 2010, down slightly from 99.5 in 2009, and from a baseline of 100.0 set in 2007.
The index shows a strong reduction in confidence in 2007-2008, falling from 100 to 92.4, but rising again by 7.7% to 99.5 in 2008-2009. Between 2009 and 2010 there was a small decrease of 0.4% to 99.1.
However, rising interest rates and the rising cost of living are a key concern for homebuyers and the proportion of respondents who expect to experience repayment difficulties in the next 12 months has jumped from 15% to 20%.
Of these, the amount blaming the rising cost of living has increased to 61% from 48% in 2009, whilst 61% nominated interest rates.
Acting CEO Paul Caputo said although higher levels of employment, lower interest rates and government stimulus helped first homebuyers to meet their mortgage repayments, he warned that if employment continues to improve it will put pressure on inflation and, in-turn, current interest rate levels.
Meanwhile, Caputo said the rental trap is set to return for many would-be homebuyers.
The survey results indicate that saving for a home is harder than it was before the Global Financial Crisis, particularly as housing is getting less affordable. Just 25% thought it was a good time to buy a house in 2010, a sharp plunge from the 50% in 2009.
“Rising interest rates have had a marked influence on confidence. That said, there will still be opportunities for would be homebuyers who are well positioned to service a loan but don’t have a large deposit. Lenders mortgage insurers are still insuring 95% LVR loans to suitable applicants, which helps make homeownership possible sooner,” he concluded.
Australian Property Journal
