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New data has revealed that more than half of Australians planning to purchase property are “very concerned” about rate changes.
Lenders moving their rates independently of the Reserve Bank of Australia is “worrying” the majority of first time buyers, new data has revealed.
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Mortgage Choice’s annual First Home Buyer Survey found that 57.5 per cent of Australians planning to purchase property in the next two years are ‘very concerned’ or ‘somewhat concerned’ about lenders moving interest rates independently of decisions made by the central bank.
One in five first home buyers didn’t even know that lenders could move rates independently of the RBA, according to the survey.
The findings come just weeks after Westpac, CBA, NAB, ANZ and a host of non-major lenders all lifted their rates.
“In October, we saw the big four banks raise their variable rates independently of the RBA by an average of 18 basis points, which clearly concerned first time buyers,” Mortgage Choice chief executive officer John Flavell said.
“To put these rate increases into a dollar figure, an 18-basis-point rate increase would see a home owner’s monthly mortgage repayments climb by more than $45 on a $400,000 mortgage with an interest rate of 5.43 per cent,” Mr Flavell said.
While many potential first home buyers are “understandably” concerned about the idea of the banks raising their rates independently of the Reserve Bank, the Mortgage Choice CEO said it was important to remember that even with this latest rate hike by some of Australia’s lenders, home loan rates continue to sit at 50-year lows.
“Now is still a great time to be a first home buyer as there are plenty of incredibly competitive, sharply priced products they can choose from,” he said.
While the survey found the majority of potential first time buyers are concerned about rates rising independently of the Reserve Bank, Mr Flavell said the data also found one in five future first time buyers didn’t even realise the banks could or would move rates on their own terms.
“When you consider that 18.3 per cent of first time buyers didn’t know the banks could move rates independently of the Reserve Bank, it is clear there is more work to be done to help improve the financial literacy of Australians,” he said.
“Anyone planning to get their foot on the property ladder needs to understand the role and power financial institutions have on the rise and fall of interest rates.”
Mr Flavell said that consulting a professional from the outset will ensure first time buyers understand the options available to them while also receiving advice on the home loan that is best suited to their needs.
[Related: FHBs feel housing affordability strain]
