Staff Writers | Herald Sun | February 22, 2011
http://www.heraldsun.com.au/money/homebuyers-oblivious-to-rates/story-e6frfh5f-1226009923103

The Big banks stoush to win mortgage business may largely be a waste of time with many of Australians unaware what interest rate they even pay.

More than a quarter of first homebuyers were unaware of  their bank's interest rate , according to a Mortgage Choice survey.

That was despite almost half (47 per cent) saying interest rates were their biggest concern for 2011, ahead of the cost of living (24 per cent ).

It also found in the past two years, almost one in five first homebuyers (predominantly Gen-Yers) have racked up extra debt some as much as $100,000 on top of their mortgage.

Of these, the survey of recent homebuyers found that having secured a mortgage, almost half bought a car, a quarter spent money on renovations and 20 per cent built up extra credit card debt.

"Getting the mortgage is not the end goal of home ownership,'' Mortgage Choice spokesperson Kristy Sheppard said.

"These results go a long way to demonstrating how mortgage stress is very often caused by additional debt people commit to after they take out their mortgage.''

The number of people saying they had accumulated significant extra debt was a 15 per cent increase on a year earlier, with 45 per cent saying they had spent more than $20,000.

Five per cent added more than $100,000 within the first two years of home ownership.

Eight per cent of the 803 people surveyed said they were considering selling their home because they could not afford repayments.

The same number said they would consider selling up if interest rates went up by one percentage point, although nearly a third of respondents did not know what interest rate they were paying despite only taking out the loan in the past two years.

Although increasing interest rates and cost of living are seen as the main issues for 2011, a separate survey showed 84 per cent of 18- to 25-year-olds, and 78 per cent of 25- to 40-year-olds wanted to make saving a priority this year.

Mortgage broker Loan Market said its survey of 598 respondents may enliven a much-depleted first-home buyer market.

Its chief operating officer, Dean Rushton, says such buyers have "dropped like flies'' since the Federal Government dumped its more generous first-home owners' grant at the end of 2009.

The initiative had been introduced during the depths of the global financial crisis.

Inquiries from first-time buyers at Loan Market dropped 15 per cent in the second half of 2010, Mr Rushton said.
Australian Bureau of Statistics data shows that in the past six months, the proportion of first-time buyers is at its lowest point in five years.

Mr Rushton said the Government's $1.2 billion first-home saver accounts scheme had done little to encourage more buyers to the market.