First-home buyers back in force

Posted on 11/12/2008  

First-home buyer activity has doubled in the past three months, according to leading mortgage broker AFG. The value of new loans to first-time buyers in November was 120% higher than in August.


First-home buyers now comprise 22% of the mortgage market, up from 10.6% in June. AFG says first-home buyers accounted for $4.7 billion in property purchasers nationally in November.


The activity of first-timers has pushed AFG’s total mortgage sales to 12-months highs of $2.4 billion.


“In many ways there has never been a better time to buy a first home,” says AFG’s general manager sales and operations Mark Hewitt. “Mortgage repayments are significantly lower than they’ve been for a long time and may go even lower. Property prices in many areas have become more affordable. And buyers are keen to take advantage of generous government incentives while they’re still on the table.”


AFG says Queensland has seen the biggest surge in first-home buyer loans, with an increase of 152% in three months. Over the same time frame Victoria has risen 120% and New South Wales 113%.


The prevalence of buyers at the lower end of the market is seen in the average mortgage size. In NSW, the average new mortgage dropped from $418,000 in October to $382,000 in November, while it Victoria it decreased from $329,000 to $316,000.


The AFG Mortgage Index also shows a rise in LVRs – the value of the loan expressed as a percentage of the property price. LVRs have increased in the past year from a national average of 65.2% to a new high of 72%.


And, not surprisingly in the current climate of falling interest rates, few borrowers are opting for fixed-rate loans. In February 2008 a quarter of loans were fixed-rate, but in November only 3% of borrowers chose this option.



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