The head of a leading Illawarra financial institution has expressed concern that first home buyers are being priced out of the heated housing market.
Illawarra Credit Union chief executive Bob Kotic said many individuals and families were being locked out of home ownership because of the high costs of buying property.
The median house price in Wollongong is now $500,000, after climbing 7.5 per cent in the three months to June 30.
On Wednesday, three of the country’s largest banks slashed their five-year fixed mortgage rates to below 5 per cent.
Mr Kotic said the credit union would consider reviewing its five-year fixed home loan rate of 5.49 per cent to remain competitive with the banks.
The IMB has a five-year fixed rate of 5.59 per cent.
‘‘The IMB continuously reviews its rates as part of its better value banking promise to members,’’ said IMB CEO Robert Ryan.
‘‘Whilst the major banks are playing catch up with others in the market, the IMB has had one of the lowest fixed-rate home loans in Australia since December last year, with a one-year fixed rate of 3.99 per cent, which is well below the major banks’ fixed rate offers.
‘‘Our three-year rate of 4.89 per cent is the most popular fixed rate among IMB members and we have kept this below the major banks for a significant period of time.’’
Mr Kotic said the Illawarra Credit Union had some of the sharpest home loan rates on offer: a one-year fixed rate of 3.95 per cent; a two-year fixed rate of 4.45 per cent; and a standard variable which been cut from 5.7 per cent to 4.7 per cent.
He said the first half of the year had been extremely busy with home loan approvals.
‘‘I think people are in many respects deciding that with the current interest rate market, it is worthwhile entering into property but also I think there could be a driver behind that in terms of people fearing they might miss out with the price increases that are happening and the cost of property going up,’’ he said.
He said that while interest rates were generally low the cost of buying property had gone up.
‘‘First home loan buyers are finding it extremely difficult at the moment because of the costs of having a reasonable deposit to enter the market, and if they don’t have a deposit, lenders mortgage insurance is quite expensive,’’ he said. ‘‘I am quite worried for that market segment.’’
Illawarra Real Estate Institute chairman Trever Molenaar said the latest Australian Property Monitors’ data – which showed the median house price in Wollongong had increased 13.9 per cent over 12 months from $439,000 to $500,000 – reflected what had been happening in the Wollongong market.
‘‘Prices have been going through the roof but the market has steadied itself a bit now that we are coming into winter,’’ he said.