The increasing cost of living is deterring many people from purchasing property, a national survey has found.
According to a majority (42 per cent) of Loan Market mortgage brokers, daily living cost pressures are the main culprit behind a dramatic slump in home loan approvals.
Loan Market chief operating officer Dean Rushton said 29 per cent of the 202 brokers who responded to the survey thought potential interest rate rises were the major reason, while 15 per cent pointed towards flat property prices and 14 per cent first home buyer affordability.
“The key driver bringing down approvals – which latest Australian Bureau of Statistics (ABS) figures showed were at a 10 year low - appears to be the everyday costs consumers are facing,” Mr Rushton said.
“Many people simply can’t take on home loan credit when they are paying increased petrol and food costs as well as higher charges for utilities such as electricity.”
Mr Rushton said that it was no surprise that potential interest rate lifts from the Reserve Bank of Australia had ranked second as the foremost factor affecting borrowing levels.
“Rate rises, in a time when most consumers are trying to keep rising every day bills at a minimum, are perceived as a major obstacle in obtaining a mortgage,” he said.
Mr Rushton said talk that Australians could be hit with an interest rate hike from the RBA as soon as next month was premature particularly given the weak recent approvals data.
He also said buyer could find some respite in the competitive pricing in the home loan market.
“With weaker home loan demand lenders are having to fight harder than ever for your business,” he said.