People are worried they don’t have the job security they need to get a mortgage and buy a house, according to a report released by a leading broker, at a time when 10 per cent of the working population are forecast to be out of work.
About 70 per cent of people surveyed by Aussie Home Loans believe job security will be an issue when it comes to buying a new property.
The findings, revealed in the report ‘COVID conundrum: COVID-19 property impact’, were collected over a fortnight in June by surveying 2791 adults -- 1874 of them with plans to buy a property within the coming five years.
The pandemic has sown confusion among property owners, the report found. A third of people surveyed (35 per cent) said their plans to buy had been set back by mostly a year or more. About a quarter (26 per cent) believed the pandemic presented an opportunity and planned to buy sooner, but they were not sure what that opportunity would be.
Generally, the survey found, most people believe the pandemic has made it harder for them to enter the market and buy a property -- at 56 per cent.
This is despite a quarter of people (26 per cent) having more savings now than they did before the coronavirus pandemic led to lockdowns in March.
The pandemic hasn’t affected most people’s long term sentiment towards the property market. About 60 per cent still have confidence in it, while 83 per cent of first home buyers plan on making a purchase within the next five years.
Mortgages are cheaper than they’ve been in a long time
A few levers have been pulled by banks, businesses and the government to help people ride out the bumpy pandemic. Among them are record low interest rates on mortgages, the introduction of home loan repayment holidays and the government’s HomeBuilder scheme.
Reserve Bank Governor Philip Lowe has spruiked the advantages of refinancing onto lower interest rates in a recent speech.
“I encourage people who haven't already taken up the opportunity to do that to look at their mortgage rate and look for a better deal,” he said.
“For many years I’ve been, in lots of public forums, I've been encouraging people to look at the rate they were getting from their bank, and if they weren’t getting a very low rate, go and knock on the door and set up a Zoom conference with their banker and ask for a better deal.”
After the RBA set the cash rate at the historical low of 0.25 per cent, interest rates on variable and fixed rate mortgages have tumbled, spurring many people to refinance.
A recent RateCity survey found 43 per cent of home loan borrowers are looking to refinance due to the low rates and the COVID-19 pandemic -- an increase of 24 per cent over the same period in 2018.