Homeowners appear to be keeping a closer eye on their finances, cutting back on non-essentials and, where appropriate, refinancing their loans to cope with the rate rises, according to a survey released this week.
The survey of franchise operators carried out by Resi Mortgage Corporation found that, while the two interest rate rises so far this year have made home buyers more cautious about borrowing money, with fixed rates strong in popularity, there is still a marked increase in interest in loans for first home buyers.
The late-September survey of Resi's national franchise network also showed that - even though economists may be divided on the topic of future rate increases - many home buyers are anticipating another official rate increase by the end of the year.
Eighty-four per cent of respondents said that this was the feedback they have received from clients and potential clients. Seventy-seven per cent also said that the two recent rate rises have made borrowers more cautious.
Although a small proportion (12 per cent) of Resi franchises said that the rate rises appeared to have had little impact on their customers, the rest listed refinancing, cutting back on non-essentials, and keeping a closer eye on their finances as the main ways people were coping with the rises. Around eight per cent of respondents said that people were taking out smaller loans.
"Based on the results of the survey, most home buyers appear to be behaving sensibly in the current purse-stretching environment, with one eye on a possible further rate increase in coming months," Resi's National Consumer Advocacy Manager Lisa Montgomery said.
"People at the lending `coal-face', who are talking to home buyers every day, are detecting greater financial caution in their approach. They are adapting to the past rate rise but aren't eager to see more," said Ms Montgomery.
"With this in mind it's perhaps not surprising that a third of our franchises have seen a significant increase in the popularity of fixed rate loans over the past few months," she said.
Ms Montgomery said that loans for first home buyers have also been growing in popularity, with another third of Resi franchises seeing a notable increase in interest in these loans.
This is backed up by Resi internal statistics which show that applications from first home buyers increased by 50 per cent in the three months between July and September this year.
"While rate rises and petrol price hikes haven't been ideal for first home buyers, it seems that there are a good number who are deciding to make the most of more affordable property prices in most States," she said.
"While around a fifth of our franchises are seeing increased interest from investors, it continues to be a fairly quiet area of the market.
"When this eventually turns around, first home buyers will once again face far more competition for properties."
