Buyers warned not to get trapped by low interest rates

A HISTORICALLY low interest rate is giving first home buyers hope for finding their dream home in Gladstone - but experts have warned buyers could be trapped in a mortgage they can't afford.

Developers and lenders, including VillaWorld Homes' Little Creek in Gladstone, are out to attract prospective first homeowners.

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VillaWorld manager Murray Simpson said its recent $0 deposit offer had been popular, with 14 contracts already signed.

"Prices are coming down and we're starting to see a few more people come into the market, and the interest rate is definitely helping," Mr Simpson said.

The offer is only available to buyers who qualify for the $15,000 Great Start Grant.

But consumer advocates have warned that easy credit could mean potential buyers over-extend themselves.

Choice spokesman Tom Geoffrey said new buyers should plan for higher rates.

"There's definitely the possibility that people will be attracted by low interest rates, and that could get them into a mortgage trap," he said.

He recommended "stress-testing" repayments.

Real Estate Institute Queensland local representative Mark Spearing, who's also the principal of LJ Hooker Gladstone, backed up the sentiment.

"I think it's definitely a risk, and that's where responsible lending from banks and financial institutions comes into play," he said.