HomeBuilder sparks surge in home loans, new builds and renos

, , ,

Thousands of families across the country who had been thinking about a new build, or tackling an overdue renovation project, have rolled up their sleeves and committed to it, according to latest ABS data.

And to be honest, we’re not overly surprised. The federal government’s $25,000 HomeBuilder grant is nothing to sneeze at.

But the Australian Bureau of Statistics’ (ABS) Lending Indicators data makes for very encouraging reading nonetheless.

It shows the total value of new loan commitments for housing rose 12.6% in August to $21.3 billion.

There was also a big increase in people seeking to renovate their homes. ABS building approval data shows the value of alterations and additions to residential buildings (‘renos’) increased by 7% to $784 million in August.

That’s the highest level recorded since April 2016.

But before we get into HomeBuilder, let’s look at the home lending figures in a little more detail.

Borrowers seeking new home loans

Of that $21.3 billion in new housing loan approvals we mentioned earlier, $16.3 billion was comprised of owner-occupier home loans, and there was $5 billion worth of investor loans.

That means owner-occupier home loan commitments increased by 13.6% in August, which is the largest month-on-month rise recorded by the ABS, and eclipses the previous record of 10.7% set in July.

The Housing Industry Association (HIA), which is the official peak body of Australia’s home building industry, says that HomeBuilder is to thank for the surge in demand.

They point out that in August the number of loans for the construction of a new dwelling increased by 22.9% to 4,679 – the highest level in over a decade.

“The short-term stimulus from HomeBuilder is emerging in the housing finance data released by the ABS,” says HIA’s Chief Economist, Tim Reardon.

“There has been a substantial improvement in sentiment and confidence in the housing market.”

So, what’s the HomeBuilder scheme again?

The federal government scheme aims to assist owner-occupiers (including first home buyers) who want to buy a new home, or begin work on eligible renovations, by providing them with a $25,000 tax-free grant.

It’s available to people building a new home for less than $750,000, or to those who spend between $150,000 and $750,000 renovating an existing home, subject to certain eligibility criteria.

You can find out more about the scheme and eligibility here, but here’s the big catch: applications for the HomeBuilder grant must be received no later than 31 December 2020.

So if you’re interested in applying for the scheme, you’ll want to get in touch with us asap.

Not only can we walk you through how to apply for it before the deadline but, just as importantly, we can assist you when it comes to applying for finance.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The First Home Loan Deposit Scheme is back; bigger and better!

The First Home Loan Deposit Scheme is back; bigger, better and more buyer-friendly than before. If you’re a first home buyer who missed out on the first two rounds, then here’s how to make it a case of third time’s a charm!

It’s federal budget week, and this year’s big winners in the world of property and finance are first home buyers, with the federal government announcing a fresh extension to the First Home Loan Deposit scheme (FHLDS).

Today we’ll look at why the third iteration of this super popular scheme might be a better fit for your first home-buying prospects than the previous two versions.

Why’s this scheme so popular?

The FHLDS allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI) – which can save you up to $10,000.

When the scheme was launched in January, and then again in July, the 10,000 available spots filled up within a few months both times.

That means if you’re a first home buyer who’s interested in participating in round three then you’ll want to get the ball rolling on your application sooner rather than later to beat the crowds.

Bigger and better than before

Now, the scheme comes with a small catch this time around: it’s only available for first home buyers who purchase new builds.

But the good news is the scheme is available alongside other state and federal government first home buyer schemes and stamp duty concessions.

That now includes the recently launched $25,000 HomeBuilder grant. And in some states – including Queensland, Tasmania and South Australia – you can reportedly even put that $25,000 grant towards your initial deposit.

When combined with those particular states’ first homeowner grants ($15,000 to $20,000), that’s basically the deposit for your first home right there.

Also, under the latest extension, first home buyers can now purchase more expensive properties, reflecting the fact that new builds are generally more expensive.

Indeed, the caps for properties eligible under the latest iteration of the scheme have been lifted across the country. New caps are below.

Sydney: $950,000 (up from $700,000)
Melbourne: $850,000 (up from $600,000)
Brisbane: $650,000 (up from $475,000)
Perth: $550,000 (up from $400,000)
Adelaide: $550,000 (up from $400,000)
Hobart: $550,000 (up from $400,000)
Canberra: $600,000 (up from $500,000)
Darwin: $550,000 (up from $375,000).

Areas outside capital cities and major regional centres in each state have different price caps, so be sure to check out the full list.

There are other important eligibility details worth checking out too, such as income tests, prior property ownership tests and an owner-occupier requirement.

Time’s ticking!

It’s important to note that round three of the FHLDS began on Tuesday (October 6) – so the race for new openings has already begun.

And while 10,000 spots might sound like a lot, they’ve filled up very quickly in the past.

So if you’re thinking about purchasing your first home soon, give us a call today and we’ll help you get the ball rolling on applying with one of the scheme’s 27 participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

House prices tipped to surge 15%, RBA hints at cash rate cut

, , ,

Strap yourself in: Australian house prices are tipped to experience a mild COVID-19 dip before surging 15% over the following two years, according to some of the nation’s top economists.

And in more good news for homeowners, RBA Deputy Governor Guy Debelle has hinted at further reductions to interest rates, while not going into negative territory.

Both NAB and Westpac economists have been quick to jump on board the rate cut hype train, predicting the RBA could cut the cash rate by 15 basis points to a record low 0.10% as early as October.

But back to that tipped 15% price surge

Westpac’s Chief Economist Bill Evans and Senior Economist Matthew Hassan believe house prices are set to bottom out by June 2021 after a further 2.3% fall – which would mean a total fall of 5% from the peak in April.

But the good news is they’re tipping prices to bounce back hard and fast across the country.

Indeed, the duo expects national dwelling prices to “surge” 15% until mid-2023, or 7.5% per year, led by massive gains of 20% in Brisbane and 18% in Perth.

Sydney (14%), Melbourne (12%) and Adelaide (10%) wouldn’t miss out on the action, either.

If it plays out as predicted, we could see a cumulative increase in national prices of 10% from pre-COVID highs over a three year period.

“This recovery will be supported by sustained low [interest] rates, which are likely to be even lower than current levels,” Mr Evans says.

Such a rebound would also be assisted by ongoing support from regulators, substantially improved affordability, sustained government fiscal support, and a strengthening economic recovery.

Mr Evans adds the recovery would be further aided “once a vaccine becomes available, which we expect in 2021″.

Got your eye on a property?

For those who are confident in their financial circumstances at present, Westpac’s housing market prediction certainly makes it a tempting time to buy, especially if another RBA cash rate cut soon comes to pass.

So if you’re looking to add to your property portfolio, looking for a change of scene, or keen to buy your first home and break into the market, get in touch today.

We’re here to help you find a loan that’s just right for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

First home low deposit scheme No LMI

First home buyers are now breaking into the property market more than four years faster than they typically would thanks to the little-known government First Home Low Deposit scheme. Today we’ll discuss how. 

The First Home Loan Deposit Scheme was only launched this year and the first six months of data has only just been published.

Basically, the First Home Low Deposit Scheme allows eligible first home buyers with only a 5% deposit to purchase a property without paying for Lenders Mortgage Insurance (LMI) – which can save you up to $10,000. ⁣⁣

Better yet, it’s giving first home buyers the confidence and ability to enter the property market much, much sooner.

How so?

Well, to save the 20% deposit that’s usually required to avoid paying LMI, first home buyers would typically need to save an additional $54,700 (national average) on top of their 5% deposit, according to the government report.

So by only needing to save a 5% deposit, first home buyers can enter the property market 52 months (4.3 years) faster on average.

“Buying a home has become more challenging,” says the report, “in the early 1990s, it took an average household around six years to save a 20% deposit to buy a typical dwelling. More recently, it takes around nine to 10 years.”

“Many people can afford to service a mortgage once they have passed the initial hurdle of saving a deposit.”

Another big benefit of the scheme is that it can be used in conjunction with other government initiatives, such as first home buyer grants and stamp duty concessions – so be sure to ask us about those too.

So what’s the scheme’s average first home buyer look like?

Well, they’re normally aged between 25 and 34-years-old and have usually saved a deposit of $15,000 to $30,000.

They typically earn $60,000 to $80,000 as a single, or $90,000 to $125,000 as a couple, and are often teachers (37%), nurses (25%), defence force personnel and first responders (17%), and child care workers (10%).

As to be expected, the value of the property they purchase often depends on where they live.

But here are the scheme’s median property purchase prices in each state: NSW ($450,000), Victoria ($495,000), Queensland ($350,000), WA ($335,000), SA ($306,000), Tasmania ($285,000), ACT ($442,000), and NT ($340,000).

Other interesting titbits from the scheme’s report

– Almost two-thirds of first home buyers borrowed between 94% and 95% of the property price.

– Three-quarters of guaranteed loans were taken up by Australians aged between 18 and 34.

– The average monthly mortgage repayment for borrowers using the scheme was $1,729 at the point of funding, which was equivalent to 30% of household disposable income.

– Most guarantees in the scheme were issued through mortgage brokers.

Get in touch soon

So… here’s the big catch.

The scheme is limited to 10,000 guarantees per financial year, and places are filling up by the day.

So if you’re interested in applying for and reserving a spot in the scheme, get in touch today. We can help you apply through one of the scheme’s eligible lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Where you’re most likely to score a $50,000 discount on property right now

, ,

Home sellers across the country are lowering their price expectations in droves, new data reveals. But which two capital cities have seen the highest percentage of sellers discount their asking price?

Here’s an exciting stat for all you property bargain hunters out there: the percentage of sellers dropping their asking price during COVID-19 has more than doubled in our capital cities across the country, new Domain data shows.

So which two cities have seen the biggest increase in sellers offering discounts?

Well, the head-and-shoulders leader is Sydney, followed by Melbourne, with Adelaide only just nudging out Brisbane and Perth in a photo finish for third.

But all cities are offering median discounts between $22,000 and $50,000, which we’ll look at below.

A closer look at the stats

Prices dropped on one-in-seven (14.7%) Sydney properties for sale last month, almost a threefold increase from the 5.3% of sellers who offered discounts a year earlier in July 2019.

In Melbourne, the percentage of sellers dropping their asking price during the COVID-19 pandemic increased nearly four-fold from 3.1% in July 2019 to 11.5% in July 2020.

Adelaide recorded the next highest discount figure at 10.1%, up from 3.1% last year, while in Perth the percentage of discounters almost doubled to 10% from 5.3%.

Brisbane followed closely with an increase to 9.7% from 4.4%, Canberra increased to 8.6% from 6.3% and Hobart to 5.4% from 2.8%. Darwin was the only capital to record a slight drop – with 5% of sellers offering a discount this year, compared to 5.5% a year earlier.

So what does that mean for prices?

With most capital cities offering a median discount around 4-5%, the savings you could receive on a median-priced property in each city are: $49,150 in Sydney, $35,254 in Melbourne, $26,810 in Brisbane, $26,210 in Canberra, $24,553 in Perth, $24,351 in Hobart, $23,745 in Darwin, and $22,121 in Adelaide.

But remember, that’s just the median. Better (and worse) discounts are sure to be found.

Here’s a quick table for you to compare the numbers yourself

The percentage of listings with discounts from July 2019 to July 2020:

Sydney: Increased from 5.1% to 14.7%

Melbourne: Increased from 3.1% to 11.5%

Adelaide: Increased from 3.1% to 10.1%

Perth: Increased from 5.3% to 10%

Brisbane: Increased from 4.4% to 9.7%

Canberra: Increased from 6.3% to 8.6%

Hobart: Increased from 2.8% to 5.4%

Darwin: Dropped from 5.5% to 5%

A quick note on the value of the discounts

Now, it’s important to note that the value of the discounts isn’t increasing – just the percentage of properties offering discounts.

Domain senior research analyst Dr Nicola Powell explains: “We’re seeing a broader slowdown in properties, rather than prices tanking, which is good news.

“And I think we’ll continue to see price weakness but the falls to date have been minimal and they’ll stay that way, rather than some of those outrageous predictions we saw at the start of COVID-19 of 30% falls.”

Think you might have found a bargain?

Have you recently stumbled across a discounted property that’s too hard to ignore?

If so, get in touch today and we can help you get your finances in order and apply for a home loan. The lending market can be a little tricky to navigate at present, but rest assured we’re here to help guide you through it.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.