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Although some FHBs have taken out fixed mortgages at rates of around 2% during the pandemic, these borrowers are shielded from the RBA's interest rate hikes for only a limited time. Many of them will face a tripling of mortgage rates this year, which will cause significant financial stress.
Furthermore, the latest rate hike by the RBA has reduced the borrowing capacity of FHBs by approximately 30%, making it even more challenging for them to enter the market. The RBA has indicated that it may hike rates further in the coming months, making it even more difficult for FHBs to buy a home.
In summary, FHBs are facing a perfect storm of rising rents, lower wage growth, and increasing unemployment. Additionally, rising interest rates and shrinking borrowing capacity are making it more challenging than ever for them to enter the property market.
Published:Tuesday, 14th Mar 2023
Source: Paige Estritori
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