One third of first home buyers worries about their debt

22 September 2016
According to Mortgage Choice’s annual First Home Buyer survey 1 in 3 first home buyers are worried about paying their mortgage

Alarming new statistics have revealed that 1 in every 3 first home buyers worry about managing their mortgage repayments.

According to Mortgage Choice’s annual First Home Buyer survey of 1,057 Australians who purchased their first home within the last two years or are looking to purchase their first property within the next two years, 29.2% of respondents said their biggest concern associated with owning a home was not being able to afford their repayments.

“It is quite disconcerting to hear so many first home buyers worry about how they will manage their debt,” Mortgage Choice chief executive officer John Flavell said.

“The reality is, interest rates have never been lower, meaning it should be easier than ever for borrowers to manage their debt.”

Currently on Canstar’s home loan database, minimum and average advertised home loan rates for owner occupiers are as follows:

Residential Home Loan Market – Advertised interest rates owner occupier  (19/09/2016)
Standard Variable Package Variable 1 Year Fixed 3 Year Fixed 5 Year Fixed
Average 4.46% 4.28% 4.22% 4.08% 4.54%
Min 3.35% 3.54% 3.65% 3.59% 3.94%

Source:, the search results do not include all home loan providers, and may not include all features relevant to you. Please note these are advertised rates – please check the relevant comparison rate of any specific loan products. Comparison rates are based on loan amount of $150,000. Read the Comparison Rate Warning.

“Most first home buyers would have an incredibly competitive rate – a rate they are unlikely to retain for the duration of their loan. If first home buyers are worried about meeting and managing their mortgage repayments now, how are they going to feel when interest rates start to rise?”

Mr Flavell said first home buyers can be assured that interest rates will rise at some point during the next few years.

“First home buyers should actually use the current low interest rate environment as an opportunity to pre-pay their home loan and ultimately drive their debt down as quickly as possible.”

Canstar star rating and award - incomeOn a $500,000 home loan over 30 years, monthly loan repayments at 4% interest would equate to a monthly repayment of approximately $2,387. If home loan interest rates were to rise by 2%, that monthly repayment would jump by around $600 per month, to $2,997.

The Mortgage Choice survey findings come on the heels of a Roy Morgan Research survey that found more than two-thirds (67.2%) of owner-occupied mortgages are now held by households with two incomes and that more than one-third (34.8%) of mortgage holders would be at risk of mortgage stress if even the non-main breadwinner dropped out of the workforce.

Other issues of concern identified by the Mortgage House survey respondents included:

What is your largest concern about owning a home? National NSW VIC QLD SA WA
Not being able to afford repayments 29.2% 30.5% 22.8% 28.2% 22.2% 40.5%
The length of time it takes to pay it off 19.8% 22.1% 22.0% 18.4% 18.5% 17.9%
The amount of money I will have paid by the end of the loan term 12.9% 8.4% 11.4% 18.4% 14.8% 10.7%
Buying the wrong home 10.0% 11.5% 17.1% 9.7% 5.6% 2.4%
Being committed to such a large financial obligation for so long 21.3% 22.1% 22.0% 19.4% 27.8% 19.0%

Source: Mortgage House

Share this article