First home buyers back in double digits

by Miklos Bolza20 Apr 2017
New data from aggregator Australian Finance Group (AFG) has shown the number of first home buyers is on the rise nationally.

In the AFG Mortgage Index for the third quarter of the 2017 financial year, lodgments by first home buyers increased to 10% of the total number of loans written for the first time since the first quarter of 2014.

This was due to FHB schemes such as the one recently implemented in Victoria, said AFG interim CEO David Bailey.

“First home buyer numbers have been in the single digits for some time. It is good to see state governments looking to support those trying to get a foot on the property ladder.”

Moves by Victoria and New South Wales (which is currently considering options to combat housing affordability) were a result of a nationwide shakeup of the First Home Owner Grant (FHOG) Scheme, the effectiveness of which has been questioned.

“Time will tell if the proposed changes to the scheme go far enough to assist those looking to buy their first home in our two most populous states,” he said.

The number of investors and refinancers has also dropped due to APRA-imposed lender policy changes as the regulator continues to monitor growth in investment lending.

As a result many lenders have embarked upon a series of rate increases and a tightening of credit policy for investors to comply with APRA’s guidelines,” Bailey said. “This activity has seen investor loans drop from 34% to 32% across the quarter.”

The number of refinancers also dropped from 38% to 35% last quarter – the lowest level since the third quarter of 2015.

AFG reported an increase in overall lodgment numbers of 8% from the third quarter of the 2016 financial year, driven by a surge in the number of upgraders.

However, there was a decrease in the number and value of loans lodged from the second to third quarter this year.

“If you look at the trends of quarter three every year, you’ll see that quarter three always goes down on quarter two,” Mark Hewitt, AFG general manager of sales and operations, told Australian Broker. “It’s incumbent on that period of the year. January and the first half of February are quite quiet.”

Non-major market share remained steady from the second to third quarter, holding at around 34.5% with the majors only snapping up more borrowers in the first home buyer segment.

“Non-major share is still at post-GFC highs with around 65% going to the majors and 35% to the non-majors,” Hewitt said. “That’s really encouraging from a competition point of view.”

As for why market share for first home buyers has increased for the majors, this was likely due to their friendlier policies for these types of borrowers, he added.

AFG also found that average mortgage size was growing along the Eastern Seaboard with NSW, Victoria and Queensland all increasing their state-wide average over the past three years.

South Australia has also seen growth over time with the lower house prices attracting more buyers, Hewitt said.

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