First home buyers out in force, thanks to low rates and government support

First home buyer activity has reached its highest level in 11 years – but if you’re a first home buyer, who can you trust to hold your hand through the complex mortgage process?

Before I address the crucial issue of trust, let me explain just how active first home buyers are right now, and why.

Since April, first home buyers have claimed more than 22% of all the new mortgages being taken out by owner-occupiers, according to the Australian Bureau of Statistics (ABS). This is the highest market share for first home buyers since 2009.

First home buyers market share:

There are three reasons why first home buyers are so active right now:

• There are fewer investors competing with first home buyers

• Governments are supporting first home buyers

• Lenders are supporting first home buyers

There are fewer investors competing with first home buyers

ABS statistics show that fewer investors have been buying properties over the past year or so. Last October, 12,843 investors took out mortgages. By June, that number had fallen to 10,703 – a drop of 16.7%.

Fewer investors in the market has meant less competition for first home buyers – which has encouraged more first home buyers to look for property.

Governments are supporting first home buyers

Recently, the NSW government announced stamp duty discounts for first home buyers who purchase newly-built homes. For those eligible buyers, stamp duty has been:

• Waived for properties valued under $800,000 (up from $650,000)

• Reduced for properties valued from $800,000 to $1 million (was $650,000 to $800,000)

• Waived for vacant land valued under $400,000 (was $350,000)

• Reduced for vacant land valued from $400,000 to $500,000 (was $350,000 to $450,000)

(These reductions apply for just 12 months, between 1 August 2020 and 31 July 2021.)

This comes on top of existing support for first home buyers:

• Stamp duty is waived if you buy an established home valued under $650,000

• Stamp duty is reduced if you buy an established home valued from $650,000 to $800,000

• A grant of $10,000 is available if you buy a new home valued under $600,000

• A grant of $10,000 is available if you build a new home valued under $750,000

Since 1 January 2020, the federal government has also been supporting new buyers, through the First Home Loan Deposit Scheme.

If you qualify for the scheme, the government will ‘guarantee’ your mortgage if you have a deposit of between 5% and 19.99%, meaning you don’t have to pay lender’s mortgage insurance (LMI). If you buy in Sydney, your property must be valued under $700,000 to qualify for the scheme.

Lenders are supporting first home buyers

Here are two big ways lenders are making life easier for first home buyers right now:

• Lenders have slashed interest rates to as low as 2.19%

• Some lenders are offering special deals to first home buyers (such as lower rates and LMI reductions)

Furthermore, some lenders were already offering ‘guarantor’ loans – special mortgages that allow first home buyers to enter the market with just a small deposit and without paying LMI, provided their parents offer their own home as a form of security.

If you’re a first home buyer, who can you trust?

Taking out a home loan is complicated and stressful, especially if you’ve never done it before.

So if you’re a first home buyer, who can you trust to guide you through the process?

My advice is not to go to a lender, because they’ll only recommend their own products – even if they know the bank across the road could offer you a better deal. Instead, you should go to a mortgage broker, because a broker can get you a loan with numerous lenders.

For example, I work with more than 25 lenders, which means once I get to know your unique circumstances, I can match you with a lender and loan that really suits your situation.

I know exactly what it’s like to be a first home buyer. Back in 2010, when I purchased my first home, I had a horrific experience. I had no idea what I was doing; and I made the mistake of going direct-to-lender, rather than using a broker. My bank was slow to answer my calls at crucial moments, which caused my stress levels to go through the roof.

That’s one reason why I decided to become a broker – so I could give first home buyers the experience I wish I’d received.

Since then, I’ve won the Best Residential Broker award at the NSW Better Business Awards in 2020 and 2018 and my business has received 175 five-star Google Reviews.

If you’re a first home buyer, I’ll hold your hand through the process by:

• Recommending a lender and loan suited to your unique circumstances

• Doing the complex paperwork on your behalf

• Connecting you with other professionals you need (such as a conveyancer and a building & pest inspector)

Feel free to contact me directly on 1300 425 017, send an email to alex@eventusfinancial.com.au or book a meeting by clicking the button below to see how I could assist.