Most homeowners can easily afford their mortgages, says survey

One in four first-time homeowners claimed that they could afford at least a 4% increase in their interest rates, according to an annual survey conducted by Mortgage Choice.

The figure represented 25.3% of the respondents for the survey.

Additionally, the survey revealed that a further 36.8% of respondents answered that they could afford at least a 2% increase in interest rates.

“Given that interest rates generally rise in increments of approximately 25 basis points, the majority of first home owners believe they could comfortably afford at least eight interest rate rises,’ said John Flavell, Mortgage Choice chief executive.

Flavell noted that it is because of this confidence that so few first homeowners have refinanced or planned to refinance their mortgage.

The survey asked first homeowners if they had considered refinancing their mortgages following the recent rate hikes by a good number of lenders—59.1% said they did not.

“While some first home owners would no doubt have been quick to review their mortgage following the recent rate movements, the vast majority are comfortable in their current product and rate,” Flavell remarked.

So comfortable are first-time homeowners with their current rates, that some are even making additional mortgage repayments each month, he additionally observed.

Over 56% of first-time homeowners, according to the survey, said that they make extra mortgage repayments on a regular basis.

Among those making additional repayments, 63.4% answered that they contribute as much as they can afford to the mortgage each month.

“This just goes to prove that the majority of first home owners are diligent and savvy with their money. They understand that interest rates are sitting at historical lows and as such, are keen to pay off as much of their mortgage as possible while their rates and monthly repayments are low,” stated Flavell.

Flavell pointed out that first homeowners are anticipating an increase in interest rates, and are doing what they can to make the most out of their loans.