Can’t say you haven’t been warned, often.
One in five Australians are walking such a fine mortgage tightrope that they could lose their homes if interest rates rise by even 0.5 per cent.
The love affair with property has pushed Australia’s residential housing market to an eye-watering value of $6.2 trillion.
But as Australians scramble over each other to snap up property while interest rates are at historic lows, they have gotten themselves into a bit of a pickle. They might not actually be able to afford funding our affair.
20 per cent – that’s one in five homeowners – would find themselves in mortgage difficulty if interest rates rose by 0.5 per cent or less.
An additional 4 per cent would be troubled by a rise between 0.5 per cent and one per cent.
Almost half of homeowners (42 per cent) would find themselves under financial pressure if home loan interest rates were to increase from their average of 4.5 per cent today to the long term average of 7 per cent.
“This is important because we now expect mortgage rates to rise over the next few months, as higher funding costs and competitive dynamics come into pay, and as regulators bear down on lending standards,” Digital Finance Analytics wrote.