RBA rings alarm on high debt levels
Risks to financial stability could be building as house prices and debt levels keep rising, the Reserve Bank has caution...
The unstable rate environment is encouraging more investors to err on the side of caution and lock in their mortgage, new data has revealed.
According to the latest AFG Mortgage Index, one in four (25.4 per cent) new borrowers in March chose to lock in their home loan rate – significantly higher than this time last year, when just 6.6 per cent of new home loans were fixed rates.
AFG’s general manager of sales and operations Mark Hewitt said concern about the future of interest rates was forcing borrowers to lock in to a fixed rate.
“This nervousness probably also accounts for the weighting of investors in the property market – there’s a lot of them proportionally because first home buyers and upgraders are sitting on their hands. There is a disconnect between what’s happening in the non-mining economy – which is most of us – and out of cycle rate rises. The best thing the RBA could do to stimulate confidence among buyers and upgraders would be to cut interest rates,” he said.
The Mortgage Index found there is a clear divide in the drivers of mortgage markets in the Eastern and Western seaboards.
Investors continue to dominate the NSW market, accounting for two out of five new mortgages – a proportion which has held fairly steadily for most of the past year.
By contrast, investment interest in WA has been reducing since last December, and is currently just above a quarter of all new home loans.
However, first home buyers are more active in WA than any other state, comprising 20 per cent of the mortgage mix, by far outstripping NSW on 13.4 per cent.