First-home buyer numbers up: Mortgage Choice

Home loan approvals from first-home buyers jumped to 35% in June, compared with an average of 27%, according to mortgage broker Mortgage Choice.

The significant monthly increase, reported by AAP, follows the mortgage broker revealing in its annual results released yesterday, that the number of first home buyer dwellings financed in the June 2011 quarter was up 13.4% on the March quarter.

The improvement in first home buyer activity follows a lacklustre year of mortgage take-up with Mortgage Choice reported a 2% drop in mortgage approvals against an overall nationwide contraction of 7.8%.

Mortgage Choice says a 35% drop in first-home buyer mortgages for the financial year was a major contributing factor in the contraction in mortgage commitments as existing home owners need to sell to first-home buyers before moving onto their next property.

Mortgage Choice CEO Michael Russell attributed the fall in numbers to the ending of the boosted first-home owners' grant, which he says brought forward purchases in 2009 and 2010.

However, Russell expects housing finance commitment numbers, which improved in the June 2011 quarter, to continue for the remainder of 2012 if interest rates hold steady, employment remains healthy and lenders continue to discount their mortgages.

Yesterday, NAB subsidiary UBank cut its three-year fixed rate loan by 50 basis points to 6.59%, 20 basis points below its standard variable loan.

News about a return of first home buyers follows the federal Treasury saying it had never investigated the impact of the decade old first-home owners’ grant on inflation.

The grant was introduced in July 2000. Treasury secretary Martin Parkinson said it had not “undertaken any formal modelling on house prices or the inflationary impact of the scheme”.

Federal treasurer Wayne Swan has admitted the grant has had a small effect on house prices, the Australian Financial Review reported.