April 30, 2019
The current property market spells ‘opportunity’ for first home buyers but professional help securing a home loan is more important than ever.
After years of battling rising property prices, first home buyers are now enjoying improved housing affordability, and it’s providing some excellent buying opportunities.
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Cooler values plus super-low rates
Nationally, property values have slipped 5.6% over the last year, though CoreLogic figures show that price falls in Sydney and Melbourne have been far greater, with home values dropping 9.7% and 8.3% respectively. Adding to downward pressure on pricing is the significant number of newly built apartments coming onto the market.
The Housing Industry Association (HIA) says approvals for new units averaged almost 30,000 per quarter for the three years of 2015-17, so for now at least, there’s a lot more housing stock for first home buyers to select from.
As an extra plus, home loan interest rates are still at the lowest levels we’ve seen since the 1960s. More affordable home values plus record low rates is every first home buyers favourite combo. But it won’t last forever.
Prices won’t stay low forever
The current market may offer value buying. However, despite media reports predicting further falls, property prices won’t stay low indefinitely.
Already, the HIA has reported a significant slowdown in building approvals. Approvals for new units for instance, fell to 17,778 in the December 2018 quarter – almost half the previous levels 4 , and this will progressively feed through to tighter supply, which will put the brakes on falling property prices. It makes now the time to put your first home buying plans into action.
The catch, is that the home loan market has become more complex, and it’s not just about banks tightening their lending criteria.
Home loan rates lack transparency
A report from the competition regulator – the ACCC, spelled out the lack of transparency home buyers face when it comes to home loan interest rates.
The ACCC acknowledged that it is difficult and time consuming for borrowers to shop around and compare prices. At the heart of the matter, the rate you see advertised isn’t always the lender’s ‘best’ rate. Yet home buyers, and in particular first home buyers, can’t be expected to know this.
That’s where a mortgage broker can make such a valuable difference.
Clearing up the what ifs
Buying a home is a complicated process. A broker can make it easier, letting first home buyers know exactly how much financial support they’re eligible for through the First Home Owner Grant and/or stamp duty concessions.
More importantly, a mortgage broker can identify which loans and lenders are best suited to each first home buyers unique needs, and where possible, tap into their industry experience to negotiate a better rate.
It makes speaking with a mortgage broker a sensible part of a first home buying strategy, one that can make the goal of home ownership easier to achieve – and with the right loan in place – more affordable.
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