Bank rate hikes are a "major deterrent" to would-be buyers, but could signal the re-emergence of non-banks.
The REIA-Deposit Power Housing Affordability Report has found that affordability is creeping up, but Deposit Power national manager Keith Levy said recent rate hikes could put off potential buyers.
"Interest rates have a big impact on affordability for existing homeowners and can also be a major deterrent for those looking to enter the market for the first time," Levy said.
While out-of-cycle moves by the banks could dent affordability, Levy said a positive side effect could be a return of vibrant lending competition.
"The news isn't all bad for mortgage holders, as the rises could lead to the re-emergence of non-bank and other securitised lenders into the market, looking to compete with the major banks," he said.
In spite of the recent bank hikes, housing has become marginally more affordable. The December quarter saw the proportion of income needed to meet loan repayments fall by 0.7% to 32.9%. But REIA president Pamela Bennett said affordability is still a major concern.
"Although the data shows an improvement, it is not significant and a lot more still needs to be done to improve housing affordability," she said.
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