First home buyers flood the market, borrowing $10k more than a month ago

author-avatar By on February 01, 2021
First home buyers flood the market, borrowing $10k more than a month ago

The latest data shows a 9.3% monthly increase in first home buyer loans in December 2020, now at its highest level since June 2009.

Compared to December 2019, first home buyer loan commitments were 56.6% higher in December 2020, for a total of 15,205 commitments in seasonally adjusted terms, according to the latest Australian Bureau of Statistics' (ABS) data.

First home buyers now account for 35.9% of all owner-occupied loan commitments, excluding refinancing, in original terms.

In original terms, 17,500 loans were written for first home buyers in December, for an average value of $431,617.

This represents a marked jump from 15,503 loans written in November, which saw an average value of $421,202.

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.

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%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Purchases of existing dwellings made up the bulk of new loan commitment purposes, according to ABS head of finance and wealth Amanda Seneviratne.

“Loan commitments for existing dwellings accounted for 53% of December’s rise in owner occupier housing loan commitments, while construction of new dwellings accounted for 32%," she said.

The latest lending data comes after both CoreLogic and Domain reported record-high house prices across the capital cities, surpassing pre-COVID levels.

See Also: Is Australia in a Housing Bubble?

The increase in lending wasn't just for first home buyers either - wider owner occupier lending increased to nearly $20 billion, up 8.7% on the month, and 38.9% on a year ago.

investors continued to bounce back, too, up 8.2% on the month to reach $6 billion in loans written.

In original terms, average loan size for investors was nearly $492,000 in December, up from $489,000 in November.

The ABS also says federal and state-based grants, such as HomeBuilder, have contributed to a push in the new construction of dwellings.

Construction loan commitments also grew 17.1% in December, about double the amount seen in June when HomeBuilder was first announced.

Loan commitments for owner-occupied new builds amount to more than $3.5 billion in December, around $500 million more than in November.

However, ABS data from November also revealed about 16% of renovations made in that month would have been eligible for the HomeBuilder scheme.

Business lending for new constructions is also a mixed bag, amounting to $2.13 billion - up more than 100% on November, but still down 28.9% on a year ago. 


Photo by Toa Heftiba 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): Credit Union Australia, 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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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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