The Money magazine of the Sydney Morning Herald has a powerful article about the risks of buying into property at the present time! Interest rates are rising, and lots of first home owners are already coming under mortgage stress. Of 251,000 houses purchased under the first home owner scheme in the 18 months since the government introduced it, almost 40% are experience some mortgage stress, with 30,000 of them in "severe" mortgage stress!!
Severe stress is defined as those who are behind on their repayments and are trying to sell or refinance or are being forced to foreclose.
A report by Demographia says "the median-income household would be expected to pay more than 50% of its income to service a new mortgage on a median-priced house in Sydney".
Fujitsu expects interest rates to increase 0.75% this year, which would increase the number of households reporting stress from 40% to 47%.
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