First home buyers borrow big in April

author-avatar By on June 04, 2021
First home buyers borrow big in April

New data released today shows the average first home buyer loan size grew to more than $450,000 in original terms in April.

Although there were about 2,000 fewer home buyers in April compared to March 2021, on average they borrowed about $16,000 more, with the average loan size hitting $451,516 compared to $435,234 the previous month.

That's according to the Australian Bureau of Statistics' (ABS) lending indicators data for April, which also shows another record month for owner occupied housing loans.

“The value of new loan commitments for owner occupier housing reached another all-time high in April 2021, up 4.3% to $23.0 billion," ABS head of finance and wealth Katherine Keenan said.

"New loan commitments for investors rose 2.1% to $8.1 billion, which was the highest level since mid-2017.

“The rise in owner occupier lending was driven by increased loan commitments for existing dwellings, which rose 9.2%."


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you.


Calculations from ANZ's research team show that owner occupied lending is now 55% above the average level of lending over the five years to the pandemic. 

"Monthly growth was dominated by the continued recovery in NSW (+8.9% month on month) and Victoria (+8.4%)," they said.

"Both these cities saw lower vacancy rates in April compared to March, and Sydney in particular has a convincing downward trend in vacancies.

"This is a positive sign for investors in those cities, whose borrowing may signal optimism about the continuing momentum of the labour market.

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Construction loan growth starting to wane

There was some tapering off in the construction sector, with the ABS putting that down to the end of HomeBuilder.

"Loan commitments to owner occupiers for the construction of new dwellings fell by 11.4%, following a fall of 14.8% in March," Ms Keenan said.

"These were the first monthly declines since the Homebuilder grant was introduced in June 2020. However, the value of construction commitments remained at a high level.”

However, Housing Industry Association economist Angela Lillicrap said with international borders closed, home owners were still diverting their money into housing and renovations.

“Lending for renovations continues to be strong. The value of loans for alterations and additions is up by 66.7% in the three months to April 2021 compared to the same time last year," she said.

“This is the first ABS data to show that we are past the peak in the surge in construction due to HomeBuilder.

“Low interest rates and strong house price growth will continue to support demand for new housing."


Photo by Spencer Chow on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Harrison is a Senior Finance Journalist, and joined Savings in 2020. Prior to joining Savings, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about informing readers on the strings being pulled in high-up places and how it affects everyday Australians.

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