Number of First Home Buyers Dip, as Lenders Want to See Savings

The overall value of housing finance commitments for all dwellings rose for the fifth month in a row, by 3.6%. This compared with a 6.7% rise in March and a 1.3% rise in February.
Investor-fixed loans and owner occupied housing finance demand increased notably, by 8.9% and 1.9% respectively.
“It is fantastic to see housing finance demand in Australia continue to improve, with the value of total dwelling commitments increasing for the fifth month in a row. Considering the current economic and lending conditions, a rise of 3.6% is healthy and pleasing,” Mortgage Choice CEO, Michael Russell said.
“The value of first homebuyer housing finance commitments as a percentage of all owner occupied commitments for April was 28%, setting yet another record as the highest proportion since the first homebuyer series commenced in 1991. This compared to the previous record set in March of 27.3%.
“Both the owner occupied and investor markets also appear to be heading up a solid path of growth, with demand from those areas increasing noticeably over consecutive months – the owner occupied market for a number of months in a row now.
“As for a dip in first homebuyer numbers to 16,651 in April from 17,652 in March, this is an unfortunate situation Mortgage Choice was expecting to see. Given the recent substantial tightening in lending criteria and an overall increase in turnaround times for loan applications, we are seeing more and more first homebuyers who do not qualify for a home loan. However, 16,651 is still almost double the 8,818 who entered the mortgage market in August 2008, before the First Home Owner Boost was introduced and cash rate cuts began to occur.
“All potential property market purchasers need to understand new lending restrictions coming into play. For example, most lenders now want to see at least a 5-10% deposit built over at least three months from genuine savings. Self-education is key to becoming a successful property market entrant.”
In other positive news, loans for the construction of dwellings grew 1.3% and loans for established dwellings purchases grew 0.9%. However, loans for the purchase of new dwellings decreased by 0.9%.
*Note: all figures are seasonally adjusted estimates

Written by Mortgagechoice

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of