If interest rates rise by 2%, nearly a third (29%) of Australians looking to buy their first home in the next two years will give up on the purchase, according to results from a recent First Homebuyers Survey.
The report also found that 20% of respondents said they would drop out of entering the market if rates rose by 3-4%, while more than a fifth (21%) said they would throw in the towel if rates rose by 1-2%. About 5% would abandon the market if rates rose by 0.25-1%, while 2% would give up at the next 0.25% rate hike.
"Although a large portion of first time buyers-to-be is prepared for interest rate rises and appear to be quite knowledgeable about the market, a significant proportion - 28% - says they'll back out of buying if rates increase by up to two percentage points. Savvy mortgage holders give themselves at least that as a repayment buffer each month so these buyers should think very carefully about getting a home loan" said spokesperson, Kristy Sheppard.
The survey also found that despite this, a large proportion of the respondents (78%) were planning to make lifestyle sacrifices in order to purchase, an increase on the 71% in the 2009 survey.