Property expert says homeowners impacted by the end of fixed rate mortgages should sell now

Homeowners weighing up selling should act fast and list their properties to avoid prices ‘falling off a cliff’, a leading property expert has warned.

The expiry of fixed interest rate terms on an estimated 880,000 Australian home loans this year means many borrowers will be forced to sell because they cannot afford their new, higher repayments, Anna Porter told Daily Mail Australia.

Repayments based on loan terms of around two per cent, dating back several years, will be recalculated by lenders at on variable rates of six or even seven per cent.

That would add up to $1,400 a month on a modest $500,000 home loan. 

The expiry of fixed interest rate terms on an estimated 880,000 Australian home loans this year means many homeowners will be forced to sell because they cannot afford their higher repayments

‘When fixed rate loans come off between now and end of the year that will push a lot to households to sell,’ said Ms Porter, a valuer for 15 years who now runs property investment advice service Suburbanite.

‘If a lot of people hit this affordability crunch and put their homes on the market in quick succession it will oversupply the market.

‘They might be people who have to sell quickly and need to take a lower price. Cases like that will put downward pressure on pricing and home values.’

Ms Porter advises now is the time to sell, not in six to 12 months, because the number of listings is so low that sellers are more likely to get close to their asking price.

New listings in most markets are down compared to the same time a year ago, including Melbourne (down 20 per cent), Brisbane (down 32.2 per cent) and Sydney (down 18.4 per cent).

‘National listings are still down 22 per cent on the same time last year and it is this lack of competition that is currently boosting prices,’ Porter says. 

‘There is less competition across the board in the market making it the perfect storm for sellers to capitalise and get a better price.’

While house prices have cooled, they are still higher than at the start of the pandemic for this reason.

Corelogic reported national house prices were 14.8 per cent higher in March 2023 than they were in March 2020.

The median house price in Kogarah, in Sydney’s south-west, was $1,163,750 in April 2020 and is now $1,570,000.

While house prices have cooled, they are still higher nationally than at the start of the pandemic because the number of listings are down

In Melbourne’s inner eastern suburb of Prahan, the median price is now $1,713,500, compared to $1,575,000 in April 2020.  

Higher interest rates on home loans have been one of the biggest costs households have tried to absorb as the cost of living spiralled in the past year.  

The Reserve Bank of Australia steadily raised the cash rate for 11 of the past 12 months. 

The rate was 0.1 per cent in April 2022, but by the start of May it was 3.85 per cent.

With every monthly increase, lenders passed the rate rises onto customers.