Home buyer confidence declining more rapidly: Genworth

Home buyer confidence has fallen by 2% over the last six months according to the latest Genworth Homebuyer Confidence Index (HCI). 

Confidence is now declining at a greater rate, having fallen by 1.5% and 0.3% in the previous two six-month periods (dating back to March 2010). 

Despite the latest drop, the result is 3% above the index low of 2008, which occurred during the GFC.

Overall 36% of Australians believe it is still a good time to buy a house, according to the survey. 

This sentiment is highest in Western Australia (47%), New South Wales (39%) and Queensland and Northern Territory (37%). 

"The results show the drop in borrower confidence is mainly due to an increase in the number of borrowers experiencing mortgage stress - up from 21% in March this year to 25% in this survey,” says Ellie Comerford, CEO of Genworth Australia.

Despite higher rates of mortgage stress, the vast majority (85%) of borrowers who are experiencing mortgage stress say they are not actually behind on repayments. Borrowers are also becoming more conservative, with over 41% having overpaid their mortgage within the past 12 months.

As to the reasons for mortgage stress, the survey showed the rising cost of living is the number one concern for an increasing proportion (72%) of home owners struggling with their mortgage. The second and third factors which worry home owners are rising interest rates and existing debt obligations, which are affecting 50% and 33% of stressed mortgage holders respectively.

"Consistent with the March HCI and more recent Genworth International Mortgage Trends Report, cost of living pressures are weighing heavily on borrower's minds," Comerford says. 

The Genworth Homebuyer Confidence Index measures the sentiment of mortgage holders and would-be mortgage holders about their own mortgage and the overall mortgage market. 

The Genworth HCI is based on five factors: the proportion of monthly income used to service debts, maximum loan-to-value ratio comfortable in borrowing, last 12 months repayment history, next 12 months repayment expectation and whether it is a good time to buy a home.