First home buyers still flooding market despite COVID-19 lending woes

author-avatar By
on May 06, 2020
First home buyers still flooding market despite COVID-19 lending woes

Photo by Mudassir Ali on Unsplash

Loan values for first home buyers increased in March despite soft results in other areas, according to newly released data.

The Australian Bureau of Statistics (ABS) Lending Indicators data for March 2020 found first home buyers continued to flood the market, with the First Home Loan Deposit Scheme potentially contributing.

Just over 10,300 loans for first home buyers were written in March, up from 8,930 in February.

The total value of home loans written for first home buyers in March was up 2.5%, despite a growth of just 1.16% across the owner-occupier category, and there was a 2.5% fall in the investor market in seasonally adjusted terms.

ABS Chief Economist Bruce Hockman said new loan commitments were overall steady in March, despite COVID-19 lockdowns announced late in the month.

"March loan commitments largely reflected loan applications submitted in February or the first half of March before major restrictions were introduced," he said.

“Some lending institutions reported a slowdown in new loan applications towards the end of March.”

In total, first home buyers made up nearly 32% of the owner occupier market.

The average loan size for first home buyers has increased, too, in original terms.

In February it was just over $415,000, while in March it was just under $427,000.

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
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 24, 2022. View disclaimer.

'Soft' results will get worse in April

While results were 'better than expected' in March, the full magnitude of COVID-19 lockdowns won't be seen until the April data is released, according to Westpac senior economist Matthew Hassan.

"Lags between application and approval likely contributed to firm overall result," he said.

"Approvals are set to see a steep drop as virus impacts show through more fully from April."

Mr Hassan also said the inner-details of March's results were "a little softer than the headline suggested".

"The number of owner occupier loans declined 0.9% [on the month] and construction-related finance approvals recorded a more meaningful pull back," he said.

"The number of owner occupier loans for construction (was) down 3.6% and the number for the purchase of recently built dwellings (was) down 4.5%."

Figures by SQM Research released yesterday also revealed that residential property listings nationally dropped 4.9% in April.

Compared to 12 months ago, figures are down 11.9%.

Sydney real estate listings fell most dramatically, down 19.4% on the year.

There has also been a surge in properties that have been on the market for 30 to 60 days, according to SQM's Louis Christopher.

"This tells me that sellers struggled to sell their properties over April and new sellers deferred listing," he said.

"The housing market has clearly been weakened by the coronavirus and the restrictions placed on the economy to limit the outbreak.

"With the lifting some restrictions over the course of May, we could see a lift in buyer activity for housing; however many issues persist such as the spike in unemployment and the ongoing closure of the international border."

For property prices, Brisbane was the biggest loser, with values down 1% on the month, followed by Perth down 0.9%.


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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