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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, Queensland home buyers arecurrently more
concerned about the rising cost of living, according to the latest Homeloans Home Buyer Barometer.
Thesurvey by non-bank mortgage provider Homeloans Ltd of more than 2000 current and potential
homebuyers from across Australia showed thatskyrocketing everyday living expenses far
outstripsinterest rates as their greatest financial concern over the next 12 months (34 per cent
compared with 24 per cent). Queenslanders had the highest level of concern about the cost of living (43
per cent), compared with South Australia/Northern Territory and Western Australia (36 per cent),
NSW/ACT (32 per cent) and Victoria/Tasmania (28 per cent). Second on Queenslander’s list of concerns
were interest rates (22per cent), followed by job security (tenper cent), and costs associated with raising
a family (six 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 Australians who are considering purchasing a property within the next 12 months, 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% 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:
More than three quarters of Queensland’s first home buyers seek to pay off their loan before
the end of term
Almost half of Queensland’s first home buyers are saving for more than two years for a deposit
36 per cent of Queensland investors will use equity in an existing property to purchase a new
property
35 per cent of Queenslanders are considering purchasing property within the next 12 months
For Australia’s first home buyers, affordability is the most important factor in choosing a home,
followed by perceived safety of the area and the right style and size home
For first home buyers, affordability is still first (67 per cent), followed by the right home in terms
of size and style (57 per cent), then the perceived safety of the area (55 per cent)
For investors, affordability is still first, followed by capital growth and rental income potential
The greatest barrier to home ownership is believed to be high property prices (52 per cent),
saving for a deposit (31 per cent), fear of not being able to meet interest repayments (17 per
cent)
40 per cent of respondents are planning to undertake renovations this spring/summer – the
majority of whom are investors. Of these, 28 per cent plan to renovate their kitchen and/or
bathroom whilst 22 per cent will give their property a new lick of paint; 13 per cent will extend
their home; and 13 per cent will undertake landscaping of their garden
65 per cent will use their own savings to finance the renovations, 18 per cent will refinance,
while 16 per cent will use their credit card or a new loan / line of credit
40 per cent of those planning renovations this season put their plans on hold during the GFC
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 – 0419 401 362
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