FHB Activity Surges: Finder

Posted on 10/06/2019  
FHB Activity Surges: Finder

Comparison site Finder has noted a significant 55% rise in traffic to its first-home buyer’s guides – the largest increase in the last 12 months.

This, along with falling interest rates, is creating an opportunity for first-home buyers to enter the property market, according to Finder’s insights manager Graham Cooke.

“There’s a perfect storm brewing for first-home buyers,” Cooke says, noting that prices have fallen in the biggest cities, lenders are dropping their interest rates and a federal first-home buyer’s scheme is in the offing.

He says that anticipation of the RBA’s interest rate reduction had previously caused a flurry of rate drops among lenders, especially on the fixed home loan front.

According to Finder data, 333 products from 40 lenders saw rates decline on owner-occupier fixed and variable home loans during May, ahead the RBA decision on 4 June to trim the official interest rate.

For those looking to purchase property, Cooke says that despite interest rates at record lows, there should be an allowance for rate rises in the future.

“What all borrowers need to consider is that rates will – eventually – go up,” Cooke says. “With that in mind, you should always factor in a 2-3% buffer on top of your current home loan interest rate to allow for future rate rises if and when they do happen.”

But, in the meantime, APRA has signalled that it will scrap the existing buffer which it requires major lenders to use in assessing loan applications – with the big banks assessing borrowers’ capacity to repay loans assuming a 7.25% interest rate.

That, plus the latest reductions in interest rates, will greatly increase the borrowing capacity of FHBs and other real estate consumers.

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