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
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
WIN YOUR HOME LOAN INTEREST FREE

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • WIN your home loan interest free and save up to $1.1 million. Refinance by 29 October. T&Cs apply.
  • Refinance Only. Fast online application, refinance in minutes, not weeks.
  • No Nano fees, Free 100% offset sub account. Mobile app. Visa debit card & instant payments.
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
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.^
VariableMore details
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
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

Rates correct as of September 28, 2021. 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 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
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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