Benalla’s homeowners are in a privileged position and are unlikely to feel mortgage stress at the level of their metropolitan counterparts when interest rates rise.
Despite the RBA predicting several rate increases in the next two years, Benalla’s relatively low house prices should protect homeowners from unmanageable mortgage repayments.
The ABC’s Four Corners has recently investigated the knock-on effect of interest rate rises and predicted dire consequences for many Australians.
However, figures published that suggest 43 per cent of Benalla’s 1374 mortgaged households are already experiencing mortgage stress seem to be vastly inflated.
Brian J. Howe Real Estate property consultant Travis Mullavey said the figure surprised him.
‘‘I think a couple of 25 basis point increases probably aren’t going to affect the market too much,’’ Mr Mullavey said.
‘‘I think it’s when you start to get (rises of) one per cent upwards that I think you’re going to start to see some impact.
‘‘It’s a different market in Benalla and a lot of regional centres.’’
‘‘I don’t think small interest rate rises will affect us greatly here,’’ Mr Mullavey said.
‘‘A lot of trending that I’ve seen shows that rural centres like Benalla will work in the opposite to a metro area like Melbourne.
‘‘So I’m a little bit buoyant that we might see an influx here because they’ll see the value in moving.’’
If homeowners in Melbourne find they can no longer service their mortgage repayments it is possible some will look to sell and relocate to an area with a lower median-house price, such as Benalla.
Homeowners in Benalla are only likely to experience mortgage stress if they were mis-sold home loans and Mr Mullavey thinks those people will be in the minority.
‘‘I think in general we are a conservative town, which stands us in good stead, and I think the local borrowers in Benalla generally make good lending decisions,’’ he said.
‘‘The advice they give, I find, is always very good, so I don’t think we’ll get a big impact.’’
The ABC data is based on the results of an annual, national telephone survey and more than 120 sources including the RBA, the Australian Prudential Regulation Authority and the ABS.
However, if Mr Mullavey is correct, they have missed the mark when it comes to Benalla’s homeowners.
Brad Blyss is a local business owner who has had a mortgage for 20 years and he see’s no concerns.
‘‘Interest rate rises are bound to happen,’’ Mr Blyss said.
‘‘Obviously they can’t go down forever, we have a historically low rate right now, so they are bound to move back up.
‘‘When we first got the mortgage it was at a rate a couple of points higher than we are at now, so even when they go back up it’s no different than what we initially budgeted for.’’
So with good lending practices, low prices and a history of sensible borrowing it seems that most homeowners in Benalla will be in a good position when rates rise.
The Benalla residents who might be affected are those who are renting as landlords might pass on higher costs to their tenants.
Mr Mullavey said this was a possibility, but would most likely not be the case in every instance.
‘‘Because the rental demand in Benalla is so high, it has already pushed weekly rents up,’’ Mr Mullavey said.
‘‘So I think landlords have experienced a bit of a win over the last three to five years.
‘‘You might find that some will absorb any increased costs, however, it is inevitable that some rents will go up.’’