Ninety thousand First Home Buyers are expected to lose their homes as a result of ongoing interest rate increases by the RBA.
The Reserve Bank of Australia has raised official interest rates six times in a row since October 2009 from 3.0 per cent to 4.5 per cent. Standard variable interest rates are well over seven per cent from most major lenders. 270,000 people have entered the housing market since June 2008. Many of the New Home Buyers do not have sufficient buffer to withstand the kind of rate increases predicted to come.
Furthermore, the areas where First Home Buyers have been purchasing their homes are those that have experienced the most hardship with recent price drops
Fujitsu Consulting estimates that up 40 per cent of First Home Buyers may be forced to sell their home because they have not budgeted for rates to go up as far or as fast as they have over the last 6 months. Fujitsu Consulting’s executive director Martin North said that for 95 per cent of people in mortgage stress the only way out was to sell their home. This is a very sad outcome for many, who will be less likely to afford a home in the future.