Hugh recently chatted with Matt Johnson of The New Daily to weigh in on first-home buyers taking out large mortgages during COVID-19.
Although hikes of that magnitude are unlikely in the near term, Centaur Financial Services director Hugh Robertson said households should use long-term averages to decide whether they can afford a home, as mortgages normally last for at least 25 years.
This would mean only taking on a loan if you can afford to meet the monthly repayments at 5 or 6 per cent interest, he said.
“What you don’t want to do is buy now at a great interest rate, but then have to sell it in the future,” Mr Robertson told The New Daily.
“You don’t ever want to be a forced seller.”
Mr Robertson advised first-home buyers and up-sizers to think about the bigger picture of their lives, describing the narrow fixation on interest rates as “first-level thinking”.
“It’s got to be realistic and fit within your overall personal financial plan,” Mr Robertson said.
“Just because a bank says you could borrow $800,000 doesn’t mean you should borrow that. And for anyone who is just starting out, we would say start with something that’s affordable and not your forever home.”