Home buying intentions still near record highs despite pandemic, says CBA

author-avatar By on April 22, 2020
Home buying intentions still near record highs despite pandemic, says CBA

Photo by Mitchell Luo on Unsplash

Buyers are still pressing ahead with their search for a home despite the coronavirus pandemic, according to new data.

The latest Commonwealth Bank (CBA) Household Spending Intentions Series (HSI) data showed home buying intentions declined only marginally in March, but still remained near all-time record highs.

CBA Chief Economist Stephen Halmarick said low interest rates could be supporting buying intentions but pointed to a drop in turnover caused by the ban on auctions and open homes.

"The Reserve Bank of Australia's substantial monetary policy easing over March has seen mortgage interest rates fall and this would (under normal circumstances) be expected to support buying intentions," he said.

"Since March, however, turnover in the housing market has declined significantly as public open houses and public auctions were banned, as evidenced by the fall in auction clearance rates.

"Rising job insecurity is also a factor.”

Property values in the country's two largest markets are expected to be hardest hit by the pandemic and could fall by as much as 30%, which would spell opportunities for buyers.

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
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
FixedMore details
NO UPFRONT OR ONGOING FEES

Basic Home Loan Fixed (Principal and Interest) (LVR < 70%) 3 Years

NO UPFRONT OR ONGOING FEES

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. Rates correct as of October 27, 2021. View disclaimer.

The spending habits of Australians in response to the pandemic could be clearly seen in the data.

"The Commonwealth Bank Household Spending Intentions (HSI) series, data to end March 2020, indicates a clear response to efforts to slow the spread of COVID-19," Mr Halmarick said.

Entertainment and travel spending intentions fell sharply in March as lockdown and travel restriction measures took hold. 

"The March Travel HSI readings are the lowest, by a large margin, since the series began," Mr Halmarick said.

"The ongoing shutdown of key sectors of the economy, the effective closing of the borders and the government directive to ‘stay at home’, could be expected to weigh on the Travel intentions HSI for a number of months."

In contrast, retail and health and fitness spending intentions both jumped significantly higher in March.

"The surge in spending in March was likely related to consumer’s response to the developing COVID-19 shutdown and a jump in spending on supermarket items, alcohol and household equipment and furnishings," Mr Halmarick said.

"The increase in the Health and Fitness HSI may be related to spending intentions on medical needs and the desire to create ‘home gyms’ and/or undertake ‘virtual’ personal training activities in the COVID-19 shutdown period."

Education spending intentions also ticked higher in March as online and virtual schooling came into effect.

There are some signs of a 'wealth effect' from the housing market supporting spending intentions for motor vehicles, according to the data.

"The HSI readings for motor vehicles showed a distinct turn up in spending intentions from late in 2019 – which then extended into early 2020," Mr Halmarick said.

"However, this improvement partly reversed in March as the COVID-19 shutdown made shopping for a new car or commercial vehicle challenging."

Car sales figures have been diving for the last two years but some experts believe the coronavirus crisis presents the "perfect storm" for buying a car.


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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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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