First home Buyer

First-home buyers are running scared from the property market

Slump in property market has first home buyers running scared.

Although the rate 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 19th, 2018
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.59%
3.61%
$0
$0 p.a.
90%
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.
3.59%
3.59%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.57%
3.58%
$0
$0 p.a.
80%
Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.
3.64%
3.66%
$0
$0 p.a.
80%
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2000000 from a convenient online lender.
3.54%
3.57%
$0
$0 p.a.
80%
A competitive variable essentials rate mortgage targeting first home buyers. Requires a 20% deposit.
3.54%
3.58%
$0
$0 p.a.
80%
Get a competitive rate, save on fees and access a 100% offset account plus redraw facility. $900 cashback offer.
3.69%
4.86%
$0
$395 p.a.
90%
Special discounted rate for first home buyers. Start your home buying journey with 2 years of fixed repayments at a competitive rate plus package discounts. Available with a 10% deposit.
3.75%
4.72%
$0
$299 p.a.
95%
Owner-occupiers can enjoy a discounted fixed rate, a rate lock feature and the ability to make additional repayments.
3.87%
3.91%
$600
$0 p.a.
95%
A home loan with no ongoing fee and a redraw facility that you can borrow up to 95% LVR.
3.68%
3.82%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (for a limited time, subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.59%
3.63%
$0
$0 p.a.
90%
Get a low variable interest rate and buy a property with just a 10% deposit. 100% offset account attached.
3.83%
3.67%
$250
$0 p.a.
80%
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee.
3.74%
4.01%
$395
$0 p.a.
80%
A competitive fixed interest rate product with no ongoing bank fees.
3.74%
3.74%
$0
$0 p.a.
80%
A basic owner-occupier home loan with a low variable rate that requires a 20% deposit.
3.87%
3.91%
$0
$10 monthly ($120 p.a.)
90%
Get Velocity Frequent Flyer Points at settlement, monthly and every three years, plus the option to make up to $10,000 a year in extra repayments.
3.68%
3.70%
$0
$0 p.a.
80%
A competitive variable rate mortgage for owner occupiers that comes with a no fee debit card with a $5,000 limit.
4.29%
4.26%
$0
$0 p.a.
95%
A competitive 3-year fixed rate loan with a high max insured LVR.
3.79%
3.79%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.85%
3.85%
$0
$0 p.a.
80%
Low fee loan with extra repayments. Pay no application and ongoing fees and take advantage of split and redraw options.
3.59%
4.14%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
3.59%
3.58%
$0
$0 p.a.
80%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for a small fee.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.69%
4.12%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.74%
4.13%
$0
$349 p.a.
90%
Get a sharp rate plus package discounts and a 100% offset account.
3.89%
4.27%
$0
$395 p.a.
80%
New borrowers or refinancers can get a discounted rate with this package loan.
3.64%
3.59%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.84%
3.84%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
4.17%
4.21%
$600
$0 p.a.
95%
Variable rate home loan from one of the big 4 banks. Available with just a 5% deposit.
3.88%
4.51%
$0
$395 p.a.
90%
Lock in a very competitive 2 year rate and get package discounts on your credit card and offset account. $1,500 cashback available (conditions apply).
3.62%
3.62%
$0
$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only. Eligible borrowers can get a 15% discount on home and contents insurance for the life of their loan.
3.89%
5.05%
$595
$0 p.a.
90%
Investors can take advantage of a short term fixed rate with no application or ongoing fees.
3.87%
3.92%
$600
$0 p.a.
95%
A low deposit mortgage for aspiring home owners. Fees are low and you can make extra repayments.
4.39%
4.78%
$0
$395 p.a.
95%
A low deposit package home loan. Combine your loan to get discounts on your interest rate and other NAB financial products.

Compare up to 4 providers

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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Home Loan Offers

Important Information*
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

HSBC Home Value Loan - (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Tic:Toc Live in Loan Variable Rate - Principal & Interest

Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.

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