12:00a.m. 2nd July 2008

| By Carolyn Tucker

Leading financial adviser Noel Whittaker has slammed as “irresponsible” suggestions that struggling homeowners should sell up now because things are about to worse.

The remarks by Wizard Home Loans founder Mark Bouris have also left local mortgage brokers scratching their heads.

Mr Bouris has urged homeowners battling to make their repayments due to interest rate hikes and the spiralling cost of living to "get their heads out of the sand" and realise there is trouble around the corner.

"Interest rates have gone so high in the last few years that ... homeowners really are battling. And there’s worse to come. Much worse," he said.

Mr Bouris added that those who signed up for a fixed loan three or four years ago – before rates shot up – were in for a rude shock.

"They have no idea what is about to hit them," he said.

But Mr Whittaker said suggestions that homeowners should “cut their losses” and put their properties on the market now were ridiculous.

“I think that’s absolute rubbish,” Mr Whittaker said.

“We just received tax cuts so that has taken a bit of pressure off and there is a general feeling that interest rates have reached the top of the cycle.

“If you sell your house and buy another one it costs $40,000 to $50,000 in changeover costs, and I say keep your house no matter what.”

Mr Whittaker said those having difficulty making mortgage repayments should consider other options such as refinancing before taking the drastic step of putting their homes up for sale.

A mortgage broker at Queensland Property Finance in Kawana, Adam King, said he was also surprised by Mr Bouris’s assessment and said property on the Sunshine Coast continued to show strong capital gains for homeowners.

Mr King said while interest rate rises might be putting pressure on some homeowners who had borrowed the maximum amount allowable several years ago, it was worth hanging in there if they could.

“A few years ago there was a similar feel in the market – a lot of caution and negativity after rate rises and people were worried things would go south, but here we are three or four years later and local property has shown solid growth,” he said.

“There have been good price increases in the last 18 months to two years in this area and I imagine it is the same in good locations throughout the region.

“The Sydney market hasn’t enjoyed the same level of capital growth and perhaps that is what Mr Bouris is basing his comments on but there are still good capital gains to be made here.”