With mortgage interest rates starting to rise, a lot of people are starting to think about buying their first property or upgrading to their next home. With a good chance that interest rates will rise again before Christmas, the media is getting on board too with plenty of surveys, advice and features about who will be buying, where, and how they will afford to pay their mortgage back.
An interesting story to come out in the Sydney Morning Herald this week reports on a survey of Generation Y borrowers – that is, people between the age of 18 and 29 who are already mortgage holders. The survey somewhat surprisingly suggests that these young people seem to be in a good position – they were asked whether, if interest rates rose in the next few years, they would be capable of repaying their mortgage at rates as high as 9 per cent, and 64 per cent of those asked agreed that they would. Almost half of the total number of Generation Y borrowers questions even said they would be able to repay their mortgage even if the interest rate went to 11 per cent or higher.
The same article reports predictions that by late 2010, variable mortgage interest rates are likely to be at around the 8 per cent level. That, of course, would involve a lot more unpopular Reserve Bank decisions than just the one we’re likely to get before Christmas, but it’s not impossible. Several states are already reporting property market rebounds after the downturn, so it will be interesting to see just how soon and how much these factors get more people into buying property in 2010. The next Reserve Bank board meeting takes place on December 1, so we will know more then, although the outcome seems pretty certain if you listen to most of the financial commentators.