First home buyers reach six year high

First home buyers reach six year high
First home buyers reach six year high

The proportion of first home buyers in the home loan market rose to 18.1 percent, a six year high, in the month of October.

The increase, up 0.1 percent from 18 percent in September, was driven by owner occupiers, whose number of loans committed rose by 2.2 percent, the largest gain in 15 months.

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First home buyers reach six year high

Loans in total however are down by 4.8 percent on the year, namely due to the investor drop off. Investor loans fell by 4.3 percent during the three months to October.

They were 18.5 percent lower compared with the same time last year.

“The three months to October were the worst for housing loans to investors in over 5 years,” MBA chief economist Shane Garrett said.

“August 2013 was the last time investor lending volumes were as low as they are now. Lending to housing investors has fallen by over 30% since the peak in early 2015," Garrett added. 

“The introduction of more stringent APRA regulations in early 2015 kicked off the decline in investor lending. It has been greatly exacerbated by the commencement of the Royal Commission’s work – lenders have become much more nervous about making financing available," he said. 

“The reduction in investor activity is not all down to lending policies. Many investors are reluctant about entering into markets where house prices are falling. In other places, rental price growth is soft and investors have sat out," Shane Garrett said. 

“While investors are exiting the market at the moment, the story for First Home Buyers is much more positive. At 18.1%, the FHB share of owner occupier housing loans is at its highest since late 2012. About 114,000 FHB home loans have been issued over the past 12 months - an increase of 14.9% on a year earlier," he said. 

New loans rose by 2.3 percent in October, the strongest growth rate since July 2017.

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First home buyers reach six year high

CommSec's Ryan Felsman said first home buyers continue to be more active, attracted by more affordable home prices.

"And the average home loan size lifted a little, suggesting that some buyers are still gaining access to sizeable home loans, despite tighter lending standards by banks and a slowdown in approval processing times."

The average home loan across Australia rose from $383,900 in September to $386,300 in October, up by 2.2 per cent on the year.

 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

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