First-home buyers urged to tread carefully

First Home buyers have been told not to overextend themselves when buying property because of the likelihood that interest rates could rise again. The claim was made in the Sydney Morning Herald after Dun & Bradstreet’s Consumer Financial Stress Index showed that financial stress levels were again on the rise.
The Consumer Financial Stress Index measures consumers’ demand and capacity for credit. It has increased along with the stiff increase in house prices in Sydney and Melbourne, and also limited wages growth and soft labour markets in NSW and Victoria.
Property analysts reported that both property markets were being pumped up by investors and people upgrading their homes, which had the impact of first-home buyers being shut out of the market. House prices in Sydney are at record levels and Melbourne is at near record levels. Dun & Bradstreet said mortgage stress was deemed to occur when mortgage repayments were about one-third of pre-tax income. They said mortgagees should have certainty of income and not stretch themselves too far in a bid to get a foothold in the property market. People who could not pay the mortgage ran the risk of impacting their credit record for two years.
http://www.smh.com.au/money/borrowing/be-cautious-firsttimers-urged-20131116-2xnn8.html

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