Further reductions in official interest rates by the RBA may be needed in order to awaken the sleeping first home buyer market, according to mortgage broker network 1300HomeLoan.
The company’s statement follows the latest ABS data showing the proportion of first home buyer loans out of all loans financed is in its biggest slump in history. September saw just 12.48% of all loans financed were by first home buyers - the lowest level recorded since records began in 1991.
The original number of first home buyer loans is also among the lowest levels, with just 6,364 settled in September.
1300HOmeLoan managing director, John Kolenda, says first home buyers have continued their retreat from the market despite the RBA's cash rate being at a record low of 2.5%.
He believes the RBA lowering the cash rate by two percentage points over the past two years boosted optimism in the domestic economy.
"The latest ABS housing finance figures for September showed a 4.4% rise on the previous month, which reflects the positive impact of the RBA's rate cuts," he says.
"But according to the ABS, the number of first home buyer commitments for September fell to 12.5% from 13.7% in August…The lower interest rate regime has brought investors back into the market, but first home buyers are continuing to stay away, perhaps waiting for more cuts from the RBA.”
Kolenda says first home buyers have also been ‘put off’ by some commentators and media spokespeople ‘talking up’ property prices, particularly in Sydney.
However, he believes it’s still a highly competitive mortgage market and that home loan customers should shop around for the best deal, rather than wait for the RBA to cut rates again.
"There is a great benefit in checking your home loan on a regular basis and comparing it to what else is on offer. If you just set and forget it can cost home owners tens of thousands of dollars in the long term."
On the other hand, the proportion of refinanced home loans is among the highest levels ever seen, reaching 33.8% in September.