In bad news for anyone who owns property, 1 in 6 interest-only mortgages are set to expire soon which means their repayments will become much more expensive. However, this could be good news for any potential home buyers as it looks like housing prices will lower because of the increased repayments.
According to AFR about 900,000 interest-only home loans are set to expire which means repayments will become more expensive forcing many buyers to sell their homes. This will result in a surge of houses on the market, causing property prices to drop.
On top of this, it is becoming increasingly difficult to get home loans, so there are less buyers looking which will cause prices to lower even further. Whilst that sucks for people who already own homes, it’s great news for anyone who has been saving up for their dream home or apartment.
Related: What to know about affordable housing in Australia
If you’re like me and don’t really understand the property market and home loans, please refer to this wonderful TL;DR my boss put together.
– 1 in 6 people have interest only mortgages that about about to expire.
– When they expire, their repayments will become much more expensive.
– A lot of them will then have to sell.
– Supply will flood the market and prices will drop.
– Because it’s the hardest it’s been in the past 8 years to get a home loan there will be less buyers, therefore reducing house prices further.
Related: Is it really more expensive to rent in Sydney than Melbourne?
In recent years, many young people have had to come to terms with the fact they may never be able to afford to buy a house. Whilst many people – including the creators of Monopoly – make jokes about it (often involving smashed avo), the sad truth is this is a reality for many young adults now. Here’s hoping this whole weird home loan debacle helps change that!
Check out this video explaining why and how the housing bubble burst.