First home buyers pull back amid lower stimulus

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on September 02, 2021
First home buyers pull back amid lower stimulus

The latest ABS data shows investors continued to borrow big, while there was a tapering off in lending to first home buyers.

The value of investment loans written in July was $9.35 billion, up 1.8% from the previous month. 

On the other hand, there was another dip in first home buyers entering the market, with a 6.8% fall in the number of first home buyer loans written, following a 7.8% fall the previous month.

The number of first home buyer commitments has fallen 20% since January, but remains 20% higher than a year ago. 

The value also fell from a tick over $7 billion to just over $6.5 billion in a month.

Loan commitments to first home buyers peaked in December 2020 for a value of nearly $7.6 billion.

ABS head of finance and wealth, Katherine Keenan, explained the reasons for the pullback in first home buyer lending.

"First home buyer lending fell across all states and territories, with the largest fall seen in Victoria, followed by Queensland and New South Wales," Ms Keenan said.

"While these falls were still tied to the unwinding of strength in construction lending post-HomeBuilder, the decline in first home buyer loan commitments now appears more widespread."

New record in refinancing 

The boom in refinancing is starting to filter through to ABS data, with the bureau reporting an all-time high in refinancing in July to $17.2 billion. 

This is 6% higher than a month ago.

"The value of refinancing between lenders was 60% higher in July 2021 compared to a year ago," Ms Keenan said.

"This reflected borrowers seeking out lower interest rates, particularly for fixed rate loans, and cashback deals across a large number of major and non-major lenders."

Fixed rate loans made up just 13% of new home loan lending in March 2020, compared to July 2021 where they now make up 47% of the value of the mortgage market. 

There has also been a flurry of lenders recently announcing cashback offers, sometimes to the tune of $5,000, partly enabled by the Reserve Bank's 'Term Funding Facility' providing $200 billion in virtually zero-cost funding to banks.

Nano Home Loans' CEO, Andrew Walker, said to be wary of cashback offers.

"Consumers need to be wary of pricing gimmicks such as cashback offers and honeymoon rates available in market as they hide the true cost of the loan for a consumer," Mr Walker said.

"To truly take advantage of the low interest rates in market, consumers need to look for comparison rates that match the advertised rate as that means there are no hidden fees."

CEO non-bank lender WLTH, Brodie Haupt, also warned home loan shoppers to be wary of cashback deals.


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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.

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
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
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

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • 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

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • 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.

Rates correct as of January 25, 2022. View disclaimer.


Photo by Josh Spires 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. 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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