Average FHB loans cheaper than median rents in most cities but be prepared for rising interest rates!

 Australia’s leading financial comparison website RateCity.com.au (RateCity) is warning first home buyers to prepare for rising interest rates, following a new study which claims it’s now cheaper to buy than rent on average in most Australian capital cities.

  • Cheaper to buy on average FHB loan size Vs. median rents in most capital cities: Mortgage Choice
  • But 1% rate rise could hike mortgage repayments by $41 per week or $164 per month!
  • Borrowers need to prepare for rising rates: add 2% buffer to budget

The Mortgage Choice study found Darwin was the best value to buy compared to rent, with $249 cheaper in average weekly first home buyer mortgage repayments ($401) as opposed to median weekly rent ($650). Melbourne was the only city in the study that was cheaper to rent ($360 average per week) than buy ($394 average weekly mortgage repayment).

From these figures, RateCity found it was $55* cheaper per week to buy a first home compared to renting, on average across the country.


Weekly median asking rent

Weekly loan repayments

Difference between weekly rent Vs. loan repayments





































Source: RateCity.com.au, Mortgage Choice, Australian Bureau of Statistics, Australian Property Monitors

National Average based on average of the above capital city figures.

Michelle Hutchison, Spokesperson for RateCity, said it’s worth considering buying a home if you’re prepared with the right tools and are in the right situation.

“There’s great opportunity to enter the property market this year if you’re prepared with a decent deposit, researched the home loan market using financial comparison websites like RateCity.com.au to find a good value deal, and have a stable income.

“Low interest rates are making it more affordable, lenders are willing to negotiate and the low buyer demand also gives home buyers leverage when haggling on properties.”
Mrs Hutchison said while the low interest rate environment has reduced mortgage repayments, borrowers should prepare now for rising interest rates.

“The biggest danger with buying a home for the first time is that you’ve never experienced re-adjusting your budget and fall short when rates rise.

“Interest rates are currently at record lows – variable home loans are starting at 5.12 percent by UBank according to RateCity’s database. It’s easy to get used to paying low interest but rates are likely to rise eventually and borrowers should prepare now by adding to your repayments.

“For instance, a 1 percentage point rate rise could cost an extra $41 per week or $164 per month (based on the average first home buyer loan sizes per state).

If you don’t put money aside from the start you could find yourself in trouble down the track. A good idea is to plan for a buffer of at least 2 percent, which is about $400 per month for a $300,000 home loan.”



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