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First home buyer activity spikes ahead of deposit scheme

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Malavika Santhebennur 2 minute read

Data released by Aussie Home Loans has revealed an increase in both first home buyer enquiries and applications during October.

As the federal government prepares to launch the First Home Loan Deposit Scheme on 1 January 2020, research from the mortgage broking franchise showed a 12.6 per cent increase in first home buyer enquiries, as well as a 17 per cent increase in applications during October, compared with the same period last year.

Commenting on the findings, Aussie CEO James Symond said: “Aussie anticipates first home buyer enquiries to continue to increase as young Australians review their home loan options in the lead-up to the launch of the federal government’s new First Home Loan Deposit Scheme”.

“Our data indicates that Aussies recognise that now’s a good time to do their research and chat to a broker before the scheme comes into effect, so they don’t miss out.”

The deposit scheme will give 10,000 buyers per year the opportunity to buy their first property with a deposit of 5 to 20 per cent and no lender’s mortgage insurance (LMI).

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The data from Aussie showed year to date the majority of Aussie’s first home buyers came from NSW, Victoria and Queensland, while 96 per cent of first home buyers settled their loans without the help of a guarantor.

Furthermore, only 23 per cent paid LMI, meaning the majority are paying a 20 per cent deposit.

The data also showed that in NSW and Victoria, the average deposit paid by first home buyers had decreased only minimally by 1 per cent and 5 per cent over the last year.

“Young Australians naturally want to progress in life, and buying a home is very much a part of that progression,” My Symond said.

“With the current low rates, strong auction clearance rates and the federal government deposit scheme, the new year is looking positive for first home buyers.”

The broking franchise recently reported that first home buyer settlements had risen by 9 per cent over the same period, contributing to total owner-occupied volume growth of 4.6 per cent in September.

Mr Symond had said the shift in activity was in response to recent market developments, including the Reserve Bank of Australia’s cuts to the cash rate in October.

[Related: AFG volumes propelled by market tailwinds]

First home buyer activity spikes ahead of deposit scheme
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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