Digging deep to keep roof over heads

HOMEOWNERS in some sought-after hotspots will have to find an extra 10 per cent in the family budget to meet loan repayments once the official cash rate hits 1 per cent.

Latest Proptrack data shows the suburbs most and least affected as cash rates rise off the back of this week’s jump from 0.1 to 0.35 per cent.

Proptrack’s figures show the impact after four cash rate increases of 0.25 basis points to 1 per cent, as well as if interest rates reach 2 per cent.

House owners in Surfers Paradise, Mermaid Beach, Clear Island Waters and Tallebudgera Valley would cop the city’s biggest hit.

For units, repayments would increase most in Hollywell, Bilinga, Coolangatta and Palm Beach.

The data shows that a couple in Surfers Paradise each earning the suburb’s average income of $68,000 would have to find $1120, or 9.8 per cent, if their monthly repayment average of $8170 for a house rose 1 per cent. At 2 per cent, that share goes up to 20.4 per cent of the household income.

Median house prices in Surfers Paradise hit $2.61m in the 12 months to April.

Proptrack economist Angus Moore said record numbers of interstate buyers moved north during the pandemic, forcing locals to compete for real estate.

Smart buyers made the most of cheap finance and paid ahead of mortgage schedules. “But if you bought recently, at the top of the market, you might struggle,” Mr Moore said.

The Gold Coast Mortgage Broker’s Adam Hall said firsthome buyers were the most “at-risk category”.

“Buyers will now have their confidence tested in a different market environment – a falling property market and rising interest rates. Not many have experience with that,” he said.

“The onus is now on the borrower to tighten their belt.”

Australian Prudential Regulation Authority (APRA) data analysing one million home loans granted in the past two years shows 280,000 Australians borrowed six or more times their income and/or have loan-to-value ratios of more than 90 per cent.

However, an independent study of Australian mortgage holders by money.com.au found 80 per cent of borrowers had a financial buffer built into their home loans to offset rate rises.

Buyers agent Oliver Dunstan, of Rose and Jones, said the higher-than-anticipated rate rise had exacerbated this year’s widening gap between buyer appetite and vendor expectations.