5% deposit scheme buyers face highest risk of negative equity, RBA finds
Recent first-homebuyers on the federal government's 5% deposit scheme are most vulnerable to negative equity if house prices fall.
The Reserve Bank's latest Financial Stability Review found that recent first-homebuyers using the 5% deposit scheme are most at risk of owing more than their home is worth. Fewer than 1% of all households are currently in negative equity, but those with low-deposit mortgages bought recently.
The RBA modelled what happens if property prices drop 20% nationally and the cash rate rises to 5.6% (four more increases from the current 4.6%). Under that scenario, only about 5% of borrowers would struggle to pay their mortgages.
Around two-thirds of those stressed borrowers have enough savings to cover at least six months of payments and essential costs. The RBA noted that negative equity itself does not force defaults: most borrowers could keep paying, and if forced to sell, most would still have equity left to repay their loans.
- Fewer than 1% of households
- Current negative equity rate
- 4.6%
- Cash rate currently
- 5.6% (highest since 2008)
- Rate in RBA model
- 20% nationally
- Property price decline modelled
Why it mattersThe RBA analysis reveals which borrowers face the most risk if property prices fall or interest rates rise further.
AustraliaThousands of recent Australian first-home buyers are more exposed to falling house values and rising rates than other borrowers, reducing their financial flexibility if the economy worsens.
Corroborated byperthnow.com.au
✓ Claims checked against the source and corrected before publish. checked 2 h ago
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