First home buyers paying off mortgage interests as much as they can now

One in every four first home buyers said that they would easily afford the mortgage interest rate unless it is more than double the present rate.

Mortgage Choice’s annual First Home Owner Survey, which covered opinions of a wide range of first home buyers of the last two years, showed that 25.3 percent of them could easily afford an additional increase of at least 4 percent in the interest rates. Another set of 36.8 percent of the respondents felt that they could afford at least a 2 percent surge in the rate.

Mortgage Choice Chief Executive Officer John Flavell said that first home buyers are generally comfortable in affording at least an eight percent rise as interest rates rise in increments of approximately 25 basis points. “It is for this reason that so few first home owners have actually refinanced or are thinking about refinancing their mortgage,” Flavell added.

The mortgage choice also surveyed people on whether they had considered refinancing their mortgage rate after all the major lenders across the nation increased their interest rate, and 59.1 percent of the respondents said no.

Flavell further validated the above data, citing that majority of the people were comfortable in staying at their current mortgage plans while only some had considered refinancing following the interest rate surge.

In addition, he mentioned that some of the respondents were even thinking of making additional mortgage repayment on a monthly basis as they are quite overwhelmed with their current mortgage rate. More than 56 percent of first home owners said they were making additional mortgage repayments on a regular basis.

According to Flavell, 63.4 percent of the people who opted for repayments said they pay extra depending on how much they can afford in each month. Citing additional mortgage repayments, he felt that first home buyers were diligent and thought to pay off the rent as much as they can during the phase of low-interest rate. “First home owners are acutely aware that interest rates will rise eventually, so they are keen to make hay while the sun shines,” he added.

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