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

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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

Variable
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UNLIMITED REDRAWS
UNLIMITED REDRAWS

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

    Variable
    More details
    100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
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    • 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
    Variable
    More details
    REFINANCE ONLY
    • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
    REFINANCE ONLY

    Variable Rate Home Loan – Refinance Only

    • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
    Variable
    More details
    AN EASY DIGITAL APPLICATION
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    Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

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    • Redraw- Access your additional payments if you need them
    • Use the app to get loan insights to help you pay off your home loan faster
    Variable
    More details
    • Low rate home loan with added benefits, add offset for 0.10%
    • Save thousands & make an environmentally conscious choice on your loan for homes less than 12 months old
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    Green Home Loan (Principal and Interest)

    • Low rate home loan with added benefits, add offset for 0.10%
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    • Get a 7.0 star NatHERS rating or higher for up to 1.59% discount on your variable rate home loan T&Cs apply

    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 be 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. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 14, 2022. 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. 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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    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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