iscover
Research released by Aussie Home Loans (Aussie) has found that 54 per cent of property owners prefer to renovate their homes rather than sell during the spring selling season because they’re unable to afford a new home.
Collecting responses from 1,000 home owners across the country, it was found that rising interest rates were the leading cause of this trend in renovation, with 73 per cent of respondents citing high interest rates as the key reason for investing in their existing property, rather than trading up.
Further results indicated that 26 per cent of respondents said the decision to renovate came as they needed to modernise or increase the size of their home but could not afford to buy a new home, while 22 per cent said they wanted to increase the value of their current home.
Chief operating officer at Aussie, Sebastian Watkins, said the research illustrated the “wide-ranging impacts” rising rates are having on the property market and the pinch it has put Australian families under.
“We know Spring is typically selling season in Australia, but these next few months may look a little different due to changing economic circumstances and household budgets,” Mr Watkins said.
“For generations, home ownership in Australia was a given for most families, those days seem gone.
“Now, we’re seeing a larger number of households remain in their existing homes for longer due to rising house prices and lending costs, even though that home may not meet all their needs.”
Mr Watkins added that while shifting circumstances are presenting new challenges for home owners, there’s reassurance in seeing that home owners are aware of the potential and value in their current assets.
In regard to financing renovations, 25 per cent of respondents said they would be refinancing their loan and using existing equity in their property as funding.
Of those who are refinancing, 17 per cent said using their equity would push their new loan-to-value ratio (LVR) to 80–85 per cent, while 13.5 per cent would see their new LVR surpass 90 per cent.
For those not refinancing, 29 per cent said their current savings in mortgage offset accounts are being used.
Mr Watkins encouraged home owners to reach out to a mortgage broker early on when looking to renovate or sell in order to discuss suitable ways to finance their goals.
“There are many options for home owners on the market, particularly those who are looking to reinvest back into their properties and ultimately raise their home’s valuation,” Mr Watkins concluded.
“Mortgage brokers are experts in this field and are best placed to support you on this journey.”
[RELATED: Housing affordability at 30-year low: PropTrack]
ISCOVER 
