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

Variable
More details
  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws

Variable Home Loan (LVR < 70%)

  • Min 30% deposit
  • No monthly or ongoing fees, add 0.10% for offset
  • Unlimited redraws
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
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • 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
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • 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
NO ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • 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
NO ONGOING FEES

Yard PAYG Home Loan (Principal and Interest) LVR ≤ 80%

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • 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

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 10, 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 strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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