Secret to first home buyers’ success

 

EXCLUSIVE: Aspiring first homeowners have been able to crack into the property market four years sooner using a scheme that requires just a five per cent deposit.

The Federal Government's popular First Home Loan Deposit Scheme filled its first 10,000 last financial year and about 70 per cent of all applicants purchased a detached house a majority were aged between 18 and 34.

Under the scheme eligible singles must have a taxable income in the 2019/20 financial year of less than $125,000, while couples must not earn more than $200,000.

Successful applicants only need a minimum five per cent deposit saved up - the government acts as a guarantor for the remaining 15 per cent.

This means the purchasers avoid the hefty lenders' mortgage insurance - a cost that protects the lender not the borrower if there is a default on the loan.

Assistant Treasurer Michael Sukkar said the government was doing what it could to "help Australians get into a home of their own sooner".

The First Home Loan Deposit Scheme has allowed entry-level buyers to get into their home about four years sooner.
The First Home Loan Deposit Scheme has allowed entry-level buyers to get into their home about four years sooner.

"The scheme has helped cut up to four years off the time it takes Australians to take to save and buy their first home," he said.

New figures showed single applicants were mainly in the 25-34 age bracket, earned between $60,000 and $80,000 and the median house price they purchased at was $370,000.

Couples were mainly in the same age bracket with an annual income between $90,000 and $125,000 and the median property purchase price was $425,000.

Bendigo Bank's Head of Local Banking said Nick Carter said they have been getting about 400 inquiries relating to the scheme per week.

"First home buyers are not competing with cashed-up property investors and overseas buyers so there's opportunities there," he said.

"The spring market period is about to kick off and there's an opportunity for people to own their own home."

But he warned spots in the scheme would run out "based on the rates of inquiries we are seeing".

Many fixed and variable owner occupier rates are in the two per cent range and some lenders are even offering rates with a "1" in front.

Father-of-three Chris Lane, 42, said he had "almost given up hope" of home ownership after going through multiple failed attempts to get a home loan.

Chris Lane, 42, and his wife Jacinta, 44, together with their children recently purchased their first home. Picture: Nicole Cleary
Chris Lane, 42, and his wife Jacinta, 44, together with their children recently purchased their first home. Picture: Nicole Cleary

"During COVID-19 we were able to save more with less expenses such as children's sport, commuting costs and eating out," he said.

"We purchased an old church that's been converted in a house.

"It cost $575,000 and we had saved a five per cent deposit."

Their monthly rental costs are $2040 but the mortgage repayments on their Wandin property, 40km east of Melbourne, will be slightly higher at $2300.

NSW

Number of guarantees issued 2263

Number of settlements 1809

Median property purchase price $450,000

Median deposit paid by borrower $29,250

Purchase price relevant to price cap 79.9 per cent

Median buyer age 28

VICTORIA

Number of guarantees issued 1617

Number of settlements 1270

Median property purchase price $495,000

Median deposit paid by borrower $29,250

Purchase price relevant to price cap 82 per cent

Median buyer age 29

QUEENSLAND

Number of guarantees issued 1845

Number of settlements 1508

Median property purchase price $350,000

Median deposit paid by borrower $20,000

Purchase price relevant to price cap 76.1 per cent

Median buyer age 28

WESTERN AUSTRALIA

Number of guarantees issued 441

Number of settlements 351

Median property purchase price $335,000

Median deposit paid by borrower $19,115

Purchase price relevant to price cap 81.18 per cent

Median buyer age 27

SOUTH AUSTRALIA

Number of guarantees issued 332

Number of settlements 283

Median property purchase price $306,000

Median deposit paid by borrower $18,250

Purchase price relevant to price cap 77.8 per cent

Median buyer age 27

TASMANIA

Number of guarantees issued 138

Number of settlements 112

Median property purchase price $285,000

Median deposit paid by borrower $15,500

Purchase price relevant to price cap 86.2 per cent

Median buyer age 26

ACT

Number of guarantees issued 147

Number of settlements 116

Median property purchase price $442,000

Median deposit paid by borrower $24,250

Purchase price relevant to price cap 85.6 per cent

Median buyer age 29

NORTHERN TERRITORY

Number of guarantees issued 31

Number of settlements 24

Median property purchase price $340,000

Median deposit paid by borrower $18,500

Purchase price relevant to price cap 86.8 per cent

Median buyer age 30

Source: National Housing Finance and Investment Corporation.

sophie.elsworth@news.com.au

@sophieelsworth

Originally published as Secret to first home buyers' success



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