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MEDIA RELEASE
31 October 2010
Skyrocketing cost of living outstrips rising interest rates concerns,
according to latest home buyer research
Although still bracing for further interest rate rises, Western Australian home buyers are currently more
concerned about the rising cost of living, according to the latest Homeloans Home Buyer Barometer.
The survey by non-bank mortgage provider Homeloans Ltd of more than 2000 current and potential
homebuyers from across Australia showed thatskyrocketing everyday living expenses far outstrips
interest rates as their greatest financial concern over the next 12 months (34 per cent compared with 24
per cent).
For Western Australians, the higher cost of living expenses was their biggest worry (36 per cent),
compared with higher interest rates (25 per cent). Third on the list were property prices (nine per cent),
job security (eight per cent), and costs associated with raising a family (seven per cent).
The survey found that the greatest barrier to home ownership were high property prices (57 per cent),
saving for a deposit (26 per cent), and the fear of not being able to meet interest repayments (18 per
cent).
The Homeloans Home Buyer Barometer also confirmed the recent findings from the Australian Bureau of
Statistics, which showed activity in the first homebuyer market has slowed significantly since the
phasing out of the First Home Owners Boost.
“Of those who are considering purchasing a property within the next 12 months, Australia-wide we have
seen an 11 per cent decrease in the number of first home buyers since April this year. Conversely, our
research showed that investors are becoming more active, with the number of respondents looking to
buy a property growing by 16 per cent since April,” says Homeloans’ national marketing manager, Will
Keall.
“However, more flexible lending policies are making market conditions more favourable for first
homebuyers, so we may well see a return to the market for this segment. A number of lenders –
including Homeloans – have provided more versatile mortgage options, which is heartening news for
first home buyers.”
Over the past few months Homeloans has changed the lending policy on its MoniPower loan to allow
home buyers to borrow up to 95 per cent of the value of the property. This policy change opens the
door to a number of would-be borrowers, especially first home buyers, who would otherwise be unable
to obtain finance.
The Homeloans Home Buyer Barometer also showed that high property prices are the greatest barrier to
home ownership for all types of homebuyers (first home buyers, owner-occupied non-first homebuyers,
investors), followed by saving for a deposit and ability to meet repayments.
“However, as credit policies are becoming more flexible and lenders are prepared to lend at a higher
LVR (loan to value ratio) than in recent times, saving for a deposit may well decline as a barrier,”
Keallsays.
Other findings of the Homeloans Home Buyer Barometer included:
72 per cent of first home buyers seek to pay off their loan before the end of term
More than half of WA’s first home buyers are saving for between six and 12 months for a
deposit – the highest of all states
For first home buyers, affordability is the most important factor in choosing a home (82 per
cent), followed by perceived safety of the area (55 per cent), and the right style and size home
(46 per cent)
For investors, affordability is still first, followed by capital growth and rental income potential
38 per cent of WA respondents are planning to undertake renovations this spring/summer. Of
these, 33 per cent plan to renovate their kitchen and/or bathroom whilst 21 per cent will give
their property a new lick of paint; 17 per cent will landscape their garden, and 13 per cent will
extend their home
79 per cent will use their own savings to finance the renovations, six per cent will refinance their
existing mortgage, while six per cent will use their credit card. Unlike the rest of Australia, WA
respondents said they won’t be taking out a new loan or using a line of credit to fund their
renovations
40 per cent of those undertaking renovations will be DIY, 15 per cent will call in the experts,
while 46 per cent will do some themselves and use the experts for the rest
Founded in 1985 and listed on the Australian Stock Exchange in 2001, Homeloans Ltd (ASX:HOM)
specialises in home loans, and has a wide range of products to meet the needs of all types of customers,
from first home buyers to investors.
With an Australia-wide presence, Homeloans provides a refreshing alternative to the banks for home
finance. The mortgage provider has a clear focus on customer service, and has won a number of industry
accolades including the Mortgage and Finance Association of Australia (MFAA) Mortgage Manager of the
Year Excellence Award 2009 and 2010. Homeloans offers a generous customer benefits program and is
proud to support Carbon Conscious, planting a tree for every Homeloans loan settled.
For further information:
Lisa Llewellyn
Llewellyn Communications
0419 401 362
NEWS 
