After some concern FHBs over-committed in the rush to take advantage of the government incentives in 2008 and 2009, these borrowers are facing well. They're more confident than the average, are less likely to have experienced mortgage stress and are also more comfortable with higher debt levels. But the year ahead could be crunch time, with nearly one in four FHBs expecting to find it hard to meet their mortgage commitments.
Rising costs of living, in particular higher food prices, has become the main concern for borrowers expecting difficulty meeting mortgage repayments, overtaking concern over interest rates, which most troubled borrowers in 2010.
It's not just flooding, cyclones and bushfires that are impacting the country's resources states. Residents of these states are not only showing greater pessimism about the housing market than the rest of the country, but are also experiencing greater difficulty servicing their debt. In fact, 9% of Western Australia residents surveyed said they had trouble making their debt repayments every month, compared to the national average of just 3%.
The March 2011 index finds the recent devastating natural disasters have weighed heavily on confidence with growing debt discomfort and higher incidences of mortgage stress in affected states causing the index to fall by 1.5% from 2010 levels. National homebuyer sentiment would have increased by 0.8% if it wasn't for the drop in consumer sentiment in Queensland and Western Australia – the states' most affected by events of the past summer. Genworth's hardship data tells a similar story, with hardship requests increasing 85% in January and February 2011 compared to the same period last year.
Streets Ahead is a biannual report into the current and historical levels of confidence among Australian homebuyers and aspirational borrowers, based on surveys of more than 13,000 Australians between 2005 and 2011.