One in four first home owners say their interest rate would have to more than double before they felt financial strain, according to new research.
Mortgage Choice’s annual First Home Owner Survey, which collected the opinions of first home owners who have purchased within the last two years, reveals that 25.3% said they could comfortably afford at least a 4% increase in interest rates.
On top of that, a further 36.8% said they could afford at least a 2% increase in interest rates.
“Given that interest rates generally rise in increments of approximately 25 basis points, the majority of first home owners believe they could comfortably afford at least eight interest rate rises,” Mortgage Choice CEO, John Flavell
“It is for this reason that so few first home owners have actually refinanced or are thinking about refinancing their mortgage.”
In fact, when asked whether or not they had considered refinancing their mortgage following the recent rate movements by many of Australia’s lenders, the overwhelming majority (59.1%) said they had not.
According to Flavell, the majority of first home owners are so comfortable with their current mortgage rate that they are actually making additional mortgage repayments each month.
More than 56% of first home owners said they were making additional mortgage repayments on a regular basis.
“Of those first home owners making additional repayments, 63.4% said they contribute as much as they can afford to their mortgage each month,” Flavell said.
“This just goes to prove that the majority of first home owners are diligent and savvy with their money. They understand that interest rates are sitting at historical lows and as such, are keen to pay off as much of their mortgage as possible while their rates and monthly repayments are low.
“First home owners are acutely aware that interest rates will rise eventually, so they are keen to make hay while the sun shines.”