Canberra buyers on a low deposit face a jump in repayments of $765, Brisbane buyers face $714, and the gap is $612 for Adelaide, Perth, Hobart and Darwin.

Canstar group executive financial services Steve Mickenbecker said potential buyers thinking about whether to use the scheme should consider that it means taking out a bigger loan than if they had a 20 per cent deposit, and making larger repayments.

“Your loan’s [up to] $135,000 higher, so you’ve got to be able to repay that in the first instance,” he said.

“Interest rates are going to go up, so the impact of that’s bigger again … You’re up for a significantly higher repayment and that could stress your budget.”

Loading

Interest rates could rise as soon as May or June, economists expect, for the first time since 2010. More than a million people have taken out their first mortgage since then and never dealt with a rate hike.

AMP Capital chief economist Dr Shane Oliver said some borrowers are much better prepared than others, noting the contrast between those who have had more time to get ahead on their loan compared to newer buyers.

About 40 per cent of borrowers have used the last few years to make extra repayments because they already had a loan and are now well ahead, he said.

Another group of 25 to 30 per cent are set for a substantial increase in their repayments, and the rest are in between, he said.

Recent borrowers “may not be as well-prepared psychologically” for rate rises, he said.

“Most households will be able to withstand it but there’s a significant group of households with a mortgage who would see quite a significant increase in their payments and that group is more at risk.”

On the ground, mortgage brokers said prospective buyers are well aware of the looming rate rise, but are mostly focused on trying to secure a property in an expensive market.

“It’s not like there’s a panic, people are quite aware of it,” Mortgage Choice Blaxland, Penrith and Glenmore Park principal Rob Lees said.

“They just want to get into the market really. There is a little bit of concern, it’s not like it’s extreme – it’s the emotion of wanting to buy a property and get into the market is the dominant thing.”

He works through the cost of different-sized rate rises with clients so they can consider their potential future repayments. The bank regulator also changed its home lending rules late last year, so borrowers must be able to repay their loan if interest rates rise 3 percentage points, up from a previous buffer of 2.5 percentage points, a rule change that reduced the maximum amount some buyers could borrow by about 5 per cent.

Some existing borrowers have asked about refinancing, but Lees starts by ringing their current bank to ask for a better rate. He also advises borrowers to calculate how much their repayments could be if rates go up one or two percentage points.

“They just need to know what those figures are and think about how that’s going to impact their family budget – ideally even just to be starting to put that extra money aside probably isn’t a bad thing,” he said.

Loading

Melbourne mortgage broker Andrew Kostanski, of Andine Financial, said clients have been asking about rate rises and he has been having conversations about their buffer, but said many are not stretched to their limits.

“People aren’t too perturbed about it, people are just trying to get into a home,” he said

“They’re all just so delighted they can actually bid at an auction, and get something off the plan that has finally settled, that that’s the least of their concerns at the moment.”