Smart Borrowers Cut Home Loans To Prevent a Crash
Mortgage House of Australia Managing Director Ken Sayer says a property market crash won’t occur with smart home buyers showing signs that they are reducing their home loan borrowings.
“Over the last quarter we have seen total borrowing levels in home loan applications ease noticeably,” said Mr Sayer.
“On our statistics, the total amount home loans has slipped 3.3% since peaking during the final quarter of 2003. This compares with a 21.0% rise in total amount mortgaged over the twelve months of 2003.”
“On average, home loan mortgagees are borrowing just over $288,000 at the moment with an average Loan Value Ratio (LVR) of 68%.”
“However, we are not seeing a drop off in the numbers of home loans – quite the opposite, people are still actively seeking new home loans, with volumes up 19% for us on the first quarter of 2003. Some of this is a ‘churn factor’ from refinancing as borrowers secure their positions as we enter a less buoyant property market.”
“Despite the doom and gloom predictions, this shows that home buyers are reacting to the predictions by gently managing down their home loan levels. Clearly, this provides them with a buffer zone should home loan rates rise or property values slip and it is these smart home loan borrowing decisions that will ensure that there is not going to be any sort of crash in the property market.”
Mortgage House’s home loan company have provided the following 5 tips for people looking at taking out a home loan right now.
Make sure you have completed an honest, comprehensive family budget to work out what you can afford in home loan payments.
Always work out if you can handle home loan repayments, not just on the current home loan interest rate, but on home loan interest rates at least 2.0% higher.
Make sure you are buying a property that you are prepared to stay in for at least a few years – that way you can ride out any short-term downturns
Issued for Mortgage House Home Loans by Wilkinson Media, 8969 6255