It’s a cold reality of Sydney’s white-hot property market and experts are warning it could land newly minted homeowners in trouble.
The Reserve Bank says it’s keeping an eye on financial institutions to ensure they're not lending so much that people end up in mortgage stress.Michelle Cull from Western Sydney University's school of business said while many government initiatives have made it an attractive moment for first home buyers to get into the market, they should not borrow more than they could handle.
Dr Cull said prospective buyers may want to consider basing their mortgage decisions on using an interest rate 1-2 per cent higher than current levels. "A half-a-per-cent increase on a $600,000 mortgage would be about an extra $40 a week over 30 years," Dr Cull said. Michele Levine, the chief executive of research agency Roy Morgan, said the latest data from its Single Source Survey showed rates of mortgage stress were relatively low considering the pandemic and the recession.
Even with rates so small we still see stagnation of wage growth, inflation, higher cost of living no money for family holidays- might seem fine now and next couple years while rates remain low, but biting off more than you can chew may f you in the a 5-10 years from now.
With unemployment at pre Covid levels (unbelievably good performance!) maybe property should be booming
I don't get it, if buyers stopped buying and paying these ridiculous prices vendors would have to drop their prices. Now we hear the buyers are taking on to much debt. 🤷♂️