Mortgage payments on a lower quartile-priced home fell $12 a week in April as house prices dropped to $592,000, reversing a $59/week increase seen in the first quarter. The relief was small and may be short-lived if interest rates continue climbing.
For the first time this year, first home buyers saw a small improvement in affordability. Falling house prices outpaced rising mortgage rates in April, delivering a modest reduction in weekly mortgage payments — a reversal of the trend that had been working against buyers through the first quarter.
The national lower quartile selling price dropped to $592,000 in April from $610,000 in March, while the average two-year fixed rate offered by major banks rose to 5.18 percent from 5.05 percent over the same period. The net effect: mortgage payments on a lower quartile-priced home with a 10 percent deposit fell to $767 a week from $779 a week — a saving of $12 a week.
The first quarter squeeze
That April relief stands out against a rough first quarter. Between January and March, the lower quartile price climbed to $610,000 from $583,000 while the average two-year fixed rate rose to 5.05 percent from 4.74 percent. The combined effect pushed weekly payments on a lower quartile home to $779 in March from $720 in January — an increase of $59 a week in three months. April's $12 weekly saving was a move in the right direction, but barely a dent in the earlier increase.
What comes next
Most economic forecasters expect mortgage rates to keep rising through 2026. For affordability to improve on a sustained basis, lower quartile prices would need to fall significantly — a pattern that is uncommon at the bottom end of the market, where prices tend to be more resilient than median prices. The housing market is heading into winter with little momentum, and economic uncertainty globally adds downside risk to prices. Whether that risk translates into actual price falls — and whether any falls are large enough to offset further rate rises — remains the key question for first home buyers trying to gauge when to enter the market.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.