The expectations of future rate hikes are concerning many Australian homeowners and potential homeowners, who feel that an interest rate rise would have a substantial negative impact on their finances, according to a new survey.
The 2015 QBE Barometer report, which randomly surveyed 1,014 mortgagors or consumers intending to take out a home loan, revealed that 48% of mortgagors and 73% of intenders expect a rate hike to have a ‘very strong’ or ‘considerable’ negative impact on their finances.
This has increased from the 2014 Barometer, where 47% of mortgagors and 66% of those intending to enter a mortgage were concerned about increases in interest rates.
Twenty-one percent of mortgagors believe that a rate increase will have either no real impact or a positive impact, while 7% of those intending to take out a home loan believe that rises will have a neutral impact. No potential homebuyers responded that rate rises will have a positive impact.
However, the report notes that it is important to bear in mind that many property purchasers have not experienced property ownership in a medium to high interest rate environment.
“Interest rates have been low since 2009 and so those who have purchased for the first time in the past six years may assume this is a normal debt environment,” the report states.
Despite the concern over rate hikes, the report also reveals that 43% of mortgagors are ahead on mortgage repayments and a further 41% are on track with their repayments.
This financial buffer may explain why 49% of mortgagors said losing their job would not be a problem for meeting their mortgage repayments. Furthermore, for the 51% who said job loss would affect their ability to pay their mortgage, they could still manage minimum repayments for an average of 6.8 months.
