Most say they can afford higher rates
Most mortgage holders can afford rates to rise by a further one per cent according to a survey of mortgagees by mortgage broker Loan Market. Almost 75 per cent of the 479 respondents surveyed could cope with at least three more quarter percentage point rises in the cash rate by the Reserve Bank of Australia. One in four respondents could afford rates to go above 10 per cent before their crisis point was reached.
27 per cent of respondents said they would be in financial trouble if variable rates hit 7.5 per cent, just above the level most lenders currently have their standard variable rates. “Most mortgage holders on variable rates are paying between 6.5 per cent and 7.0 per cent,” said Loan Market chief operating officer Dean Rushton. The survey found 20 per cent listed 8.0 per cent variable rates as their crisis point, while 14 per cent said 9.0 per cent and 14 per cent 10 per cent. Most economists expected further increases before the end of the year. “New borrowers should always factor in interest rates being higher when applying for home finance,” said Rushton.
Source: Perth Now