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First home buyer numbers spike to 10 year high and what to do with any loans.

First home buyers have been throwing themselves into the property market in numbers not seen since 2009.

The number of owner-occupier first home buyer loan commitments reached its highest point in ten years in January, prior to the local impacts of COVID19 with newcomers taking out 9,945 loans (seasonally adjusted), according to ABS data.

That’s a 3.2% rise on the previous month and a 20% increase on January 2019 (7921 loans).

A recent upwards trend in the home loan market was also reported in figures released by The Australian Prudential Regulation Authority (APRA).

The APRA data showed a 12.4% increase in the value of new housing loans settled by authorised deposit-taking institutions (aka lenders) in the December 2019 quarter.

What fueled the spike in first home buyers?

Two things, mainly.

The first is the federal government’s First Home Loan Deposit Scheme.

The scheme, which started on January 1, can allow first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).

As of late February, it was reported that the majority of the 5,000 places available through 25 non-major lenders for this current financial year were still available to be reserved by potential first home buyers. So if you’d like to find out more get in touch!

The other main contributing factor to the growth spurt in first home buyer numbers is low interest rates.

Earlier this month the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to a new record low of 0.50%.

This came after three cash rate cuts in 2019, with the latest as recent as October.

And interestingly, RBA Governor Philip Lowe has hinted more rate cuts could be on the way in coming months, saying the RBA will continue to closely assess the implications of the virus.

What to do with loans?

With the government mandated isolation of non essential services and activities limited to 2 people outside those who live in your house there's a little bit of time ben given to us all to watch this space. We still don't know the full extent of COVID19 and as such many things are on hold.

The main thing right now is to be talking directly to your bank if you are not able to work and concentrate on managing through this isolation period. After this period is over we will be waiting to help with any changes to loans, refinancing or fixing of interest rates; the banks aren't making these types of changes yet anyway.

The situation is still escalating so what will play out for the economy, the banking sector, the property landscape and us all, is yet to be seen.

Stay positive and we'll be here to help as soon as we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.