Homebuyer confidence has risen as significantly fewer homeowners are experiencing mortgage stress.
The Genworth Homebuyer Confidence Index rose to 98.1 in September, up 7.3 from 90.8 in March. The LMI provider said the result was driven by a significant decline in the number of homebuyers who experienced mortgage stress in the last 12 months, or who expected to experience stress in the coming 12 months.
“We suspect that the increase in confidence is a result of 13 months of historically low interest raates, increased certainty around the 2014 May Federal Budget and the ongoing health of the Australian economy,” Genworth chief commercial officer Bridget Sakr said.
The number of homeowners experiencing mortgage stress fell from 28% in March to 15% in September.
Sakr said interest rates had “virtually disappeared” as a factor in mortgage stress, with only 3% of struggling homeowners citing this as a key factor of mortgage stress versus 50% in September 2011.
“It seems clear that the low interest rate environment that we find ourselves in is having a very positive impact on the confidence levels of many homeowners,” she said.
Amid the positive data, however, were signs that first homebuyers continue to struggle. While first homebuyers who purchased in the last 12 months were overwhelmingly positive, the proportion of respondents who believe now is a good time to buy fell slightly from 42% in March to 41% in September.
“While the Genworth Homebuyer Confidence Index has returned to a positive result overall, dwelling value growth of late and the ongoing challenge of saving a deposit means that many prospective first homebuyers are still finding it difficult to enter the property market,” Sakr said.