First home buyers, investors flooding the market but borrowing less

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on November 02, 2020
First home buyers, investors flooding the market but borrowing less

Photo by Alexander Dummer on Unsplash

The latest Australian Bureau of Statistics' lending data shows more first home buyers and investors entered the market in September, but borrowed less.

The overall value of first home buyer loan commitments rose 12% in September, in original terms, but the average borrowed amount decreased down to $406,625, about a $1,300 decrease from August.

Investors also continued to steer the ship around, with the value of loan commitments in the sector increasing 5.24%.

However, investor loan size was down about 3% in September from $470,436 in seasonally adjusted terms in August. 

In total, new loan commitments rose 5.9% in September, excluding refinancing, with refinancing up 15%, in seasonally adjusted terms.

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

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
VariableMore details
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees

Rates correct as of January 18, 2022. View disclaimer.

Has the HomeBuilder bear been poked?

Construction loan commitments in September were up 25.3% on the month, and up 73.8% on the year.

ABS head of finance and wealth Amanda Seneviratne said this could be partly due to HomeBuilder.

"Approximately half of the rise in September’s owner occupier housing loan commitments was for the construction of new dwellings," she said.

“Owner occupier housing loan commitments are at historically high levels, consistent with low interest rates and government incentives. For example, it is likely that the HomeBuilder grant is contributing to increased demand for construction loans.”

The ABS also released dwelling approvals data today, with the number of dwellings approved having risen 15.4% over the month.

However this could be largely due to apartment construction, with 'private sector dwellings excluding houses' increasing 23.4%. 

Private sector houses increased 9.7% on the month.

ABS director of construction statistics Daniel Rossi also alluded to the success of HomeBuilder.

"The September results indicate continued demand for detached housing following the relaxation of COVID-19 restrictions in most states and territories. A range of Federal and state-based incentives are also providing support for the housing sector," he said.

However, Housing Industry Association chief economist Tim Reardon said HomeBuilder was more about building confidence in the market.

“These high volumes of sales, loans and approvals following the announcement of HomeBuilder will be relatively short lived. HomeBuilder was designed to provide consumers with confidence to return to the detached housing market. It has been very effective at achieving this goal," he said.

HomeBuilder is being used for new builds more than renovations, at a ratio of nearly 4-to-1, and the average value of private sector housing approved in September was $323,135 in original terms.

The latest dwelling approvals data was aided by Western Australia (+42.6%), which has its own state-based 'HomeBuilder' program, and a shorter pipeline of work than other states. 

The 'alterations and additions to residential building' category was also up just 1.1% in September, for an average value of $82,170 - below the $150,000 threshold required for the HomeBuilder grant.

Approximately only 15% of the number of alterations done in September would have been eligible for HomeBuilder.

Uptake of HomeBuilder was slow throughout its first four months, caught up in council approvals and slow state reaction times.

The government has budgeted approximately 27,000 HomeBuilder applications by the end of the year, and just over 11,000 applications have been received as of mid-October.

First home buyer sentiment lifts

A recent CUA survey of 1,500 Australians revealed more than half of those considering a property purchase are first home buyers.

Approximately 17% of first home buyers said government initiatives have enabled them to purchase a home sooner, or purchase a bigger property than they initially thought possible.

“The government initiatives in place are clearly helping many people overcome some of the roadblocks to achieving this dream, so it was very pleasing to see the recent extension of the First Home Loan Deposit scheme to help an additional 10,000 first home buyers secure newly constructed homes," CUA's chief customer officer Megan Keleher said.

However, approximately a third also said they are in a worse position now to buy a home, according to Ms Keleher.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, 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 breaking down complex financial topics for the everyday consumer.

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