First home Buyer

First-home buyers are running scared from the property market

Rates and Fees verified correct on December 10th, 2016

Slump in property market has first home buyers running scared.

Although rates of first home buyers entering the market is never constant, figures released in early November 2013 indicate that the number of first home buyers in the property market is in one of the biggest slumps in history.

The latest Australian Bureau of Statistics (ABS) data, released in November 2013, shows the proportion of first home buyer loans out of all loans financed is in the biggest slump in history.

September 2013 saw just first home buyers finance just 12.48% of all loans, which is the lowest level ever recorded since ABS began recording this data in July 1991. Overall just 6,364 first home buyers settled in September. The proportion of refinanced home loans on the other hand is among the highest levels ever seen, reaching 33.8% in September. These statistics indicate a very difficult financial situation for new home buyers and the levels of refinancing may show why.

With interest rates at record lows, borrowers with an average mortgage of $300,000 are paying almost $400 less in repayments each month. While this is great for existing borrowers who are taking further advantage of the competition and switching lenders for even bigger savings, it's having a negative impact on first home buyers

First home buyers have been hit with a double blow because of property prices and interest rates. With property prices rising this means higher costs and lower interest rates are eating away at their savings for a deposit. These concerns are stopping first home buyers from getting into the market, according to a finder.com.au survey conducted last month.

The best way to stay on top of the property market is to keep yourself informed and compare rates. Take a look at some home loans available for first home buyers and compare the rates in the table below.

Comparison of First Home Buyer Loans

Rates last updated December 10th, 2016
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.
3.55% 3.57% $0 $0 p.a. 90% Go to site More info
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
loans.com.au Essentials - New Purchases Only Up to 80% LVR (Owner Occupier, P&I)
Special offer ends 15 December. A low variable rate for new purchases as well as no application or ongoing fees.
3.39% 3.41% $0 $0 p.a. 80% Go to site More info
State Custodians Standard Variable Spring Special - LVR 80% (Owner Occupier)
Special Owner Occupier Rate. Free Offset Account.
3.59% 3.92% $0 $299 p.a. 80% Go to site More info
3.94% 4.33% $0 $395 p.a. 90% Go to site More info
ClickLoans The Online Home Loan - Owner Occupier ≤ 80% LVR
Enjoy a competitive interest rate when you have a deposit of at least 20%.
3.69% 3.69% $0 $0 p.a. 80% Go to site More info
ANZ Breakfree Package Home Loan - 2 Year Fixed (Owner Occupier) $150k+
This 2 year fixed ANZ Breakfree Package rate comes with package discount and product bundle. Terms and conditions, package fee and fees, charges & eligibility criteria apply.
3.75% 4.62% $0 $395 p.a. 95% Go to site More info
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier)
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.74% 4.12% $0 $395 p.a. 95% Go to site More info
CUA Kick Start Variable Home Loan - 2 Years Introductory (Owner Occupier)
Borrow up to 90% LVR and enjoy an introductory rate for the first 2 years.
3.69% 3.87% $600 $0 p.a. 90% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.59% 4.42% $0 $375 p.a. 85% Go to site More info
loans.com.au Offset Variable - New Purchases Only Up to 80% LVR (Owner Occupier, P&I)
Special offer ends 15 December. No application or annual fees, and access to a 100% offset account.
3.49% 3.51% $0 $0 p.a. 80% Go to site More info
ME Bank Flexible Home Loan Fixed - 3 Year Fixed Rate (Owner Occupier)
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.84% 4.66% $0 $0 p.a. 95% Go to site More info
State Custodians Standard Variable Spring Special - LVR 90% (Owner Occupier)
Special Owner Occupier Rate. Free Offset Account.
3.69% 4.02% $0 $299 p.a. 90% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Owner Occupier)
Enjoy a low interest rate and borrow up to 95% (with LMI) of your home value.
3.99% 4.81% $0 $0 p.a. 95% Go to site More info
NAB Base Variable Rate Home Loan - Owner Occupier (P&I)
A competitive no frills home loan with no application fees for a limited time. 250,000 Velocity Frequent Flyer point offer, conditions apply.
4.10% 4.14% $0 $0 p.a. 95% Go to site More info
AMP Essential Home Loan  -  Owner Occupier
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.98% 4.00% $350 $0 p.a. 90% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier)
Get a short term fixed rate for that investment property with no application or ongoing fees.
3.99% 4.90% $0 $0 p.a. 95% Go to site More info
IMB Budget Home Loan - LVR <=90% (Owner Occupier)
A competitive budget rate without any unwanted bells and whistles.
3.87% 3.92% $445 $0 p.a. 90% Go to site More info
Bank Australia Basic Home Loan - Variable (Owner Occupier)
A competitive variable that allows borrowers to borrow from a minimum of $100,000 and $0 ongoing fee.
3.59% 3.60% $0 $0 p.a. 80% Go to site More info
Australian Unity Health, Wealth and Happiness Package - (Owner Occupier)
Get a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.99% 4.02% $600 $0 p.a. 90% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 3 Years Fixed (Owner Occupier)
Split your loan for free with one of the lowest fixed home loan rates.
3.99% 4.73% $0 $0 p.a. 95% Go to site More info
IMB Essential Home Loan - LVR < 80% (Owner Occupier)
Get a discount on your rate and flexible repayment options with this loan.
4.09% 4.09% $0 $0 p.a. 80% Go to site More info
NAB Choice Package Variable Rate - $250k to $749,999 P&I (Owner Occupier)
A great variable package from NAB which includes offset and redraw features. No application fee.
4.40% 4.79% $0 $395 p.a. 95% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier)
A fixed rate package loan with flexible repayments options. 250,000 Velocity Frequent Flyer point offer, conditions apply.
3.75% 4.87% $0 $395 p.a. 95% Go to site More info
St.George Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
A no frills loan with a competitive rate and a maximum LVR of 95%.
4.08% 4.09% $0 $0 p.a. 95% More info
Westpac Flexi First Option Home Loan - 3 Years Introductory Special Offer (New Owner Occupier, P&I)
A limited time deal for new owner occupiers. Advertised rate includes 1.03%p.a. discount for the first two years.
3.99% 4.37% $0 $0 p.a. 95% More info

A look at the stats

The survey found that the biggest barrier for first home buyers is that they can't afford a big enough deposit (51%), while nearly one in three are worried they won’t be able to afford mortgage repayments (29%)

In addition, 76% of first home buyers surveyed are also concerned that lenders won't pass on full rate cuts in the future, which is no surprise as most lenders have not followed all of the Reserve Bank cash rate movements of the past few years. However, out of the first home buyers surveyed, 62% would prefer to save a smaller deposit to get on the property ladder sooner.

Comparing men and women, men are overwhelmingly bigger risk takers than women, with almost three ­quarters (70%) of male first home buyers preferring to save less and borrow more, compared with 57% of women.

Lenders mortgage insurance (LMI)
Home buyers looking to get into the property market before rates rise again should be careful of the added costs of a smaller deposit and bigger mortgage such as LMI, which is charged for loans with less than 20% deposit. For instance, saving a 10% deposit for the median house price in Sydney will cost $69,000 and LMI would be around $13,848. Add the LMI fee to your mortgage and it could end up costing over $38,000 over a 30 ­year term.

The table below shows the deposits needed to avoid LMI on median house prices in Australia.

Capital CityMedian house price20% deposit amount to avoid LMI
Sydney$690,064$138,01
Melbourne$553,447$110,689
Brisbane$440,454$88,091
Adelaide$435,153$87,031
Canberra$576,248$115,250
Perth$584,487$116,897
Hobart$317,659$63,532
Darwin$640,665$128,133

*Source: finder.com.au, Australian Property Monitors June quarter 2013 data

Michelle Hutchison

Michelle is Money Expert at finder.com.au. She's the go to for information, tips or trends in the home loan market or with credit cards, savings accounts and personal loans. You can ask her about shopping deals and life or travel insurance too.

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Related Posts

HSBC Home Value Loan - Resident Owner Occupier only

Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.

ME Bank Basic Home Loan - LVR <=80% Owner Occupier

A low variable rate loan with no application or ongoing fees.

NAB Choice Package Home Loan - 3 Year Fixed (Owner Occupier)

Receive discounts on interest rates with the Choice Package. 250,000 Velocity Frequent Flyer point offer, conditions apply.

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