Almost a quarter of Australian home owners had to reduce their spending to meet mortgage payments after last year's interest rate rises, a survey showed. About 23 per cent of respondents in the February survey of 2,500 consumers said they had to cut their spending. The survey was undertaken as part of the Fujitsu/JPMorgan Australian Mortgage Industry Report. That compares with only two per cent of respondents in the same period a year earlier. As other living costs such as petrol are on the rise, and with economists expecting another interest rate rise by mid year, it would be lower to average income earners who would struggle the most to repay their mortgages, said Fujitsu Australia managing director Martin North. "Home affordability is at a bit of tipping point," Mr North said. "If rates go up, there will be some pain," he said. Mr North said his research found that six per cent of respondents had been more than 30 days late with a mortgage payment. That percentage may double if interest rates rise another one percentage point, Mr North said. Of the 1,500 people who were contemplating buying a property for the first time, 30 per cent said they could not actually afford it. That's up from 17 per cent at the same time last year. About 24 per cent of respondents said they were willing to consider relocating to another city to afford their first home. One way development to boost home affordability may be the launch of shared equity mortgages where lenders own a portion of the property. Adelaide Bank this month unveiled a mortgage that allows up to 20 per cent of the purchase value to be held by the bank in exchange for 40 per cent of any capital gain. The lender would absorb 20 per cent of any loss. "There is a significant opportunity for lender to develop a shared equity product for first-time buyers," Mr North said. According to a data from the Real Estate Institute of Australia last month, home affordability slumped 3.9 per cent during the fourth quarter of 2006 and by eight per cent for the calendar 2006 year. The Reserve Bank of Australia raised interest rates three times last year to 6.25 per cent "Last year's interest rate rises have had a significant impact on household spending," Mr North said. SOURCE: AAP