Ending speculation, the mortgage industry has been buoyed by the news last night (May 12th) that an extension of the increased first home owner grant was included in the federal budget.
The increased grant will continue until September 30, after which it will be phased down to $14,000 for new homes and $10,500 for existing homes until the end of the year.
This is good news for brokers for whom first home buyers have provided a strong business flow in the past six months.
ABS housing finance figures showed housing finance rose a further 5% in February, representing a 24 per cent increase in finance approvals in just six months.
First home buyers as a proportion of all buyers also rose to a new high of 27.3%, compared to 26.5% in February and 16.4% in March 2008.
Shane Oliver, AMP chief economist confirmed the extension of the grant was good news for the property market.
“Overall it’s a very pro-housing budget,” he said.
The extension of the grant into the second half of the year should maintain activity but the postponement of the deadline could slow things down he said.
“Some of the first home buyer business may now have been brought forward,” he said.
Lending experts all confirm first home buyers were assisting in propping up the market. One stated:
“If you look at the long term average of first home buyers in the market it’s around 15 to 17 per cent. So we’re running around 10 per cent above system – that would be accounting for a fair bit of the increase in activity,” he said.
Observers confirm the extension of the grant is good news for the market but raises concern over the impact tighter lending policies are having. Minimum personal savings of 5% own funds for example.
The new policies have really only just started to take full effect. These March figures covers loans applied for in January and February when policies were much less stringent. We will see just how these lending policies are impacting the market in a few months.
Should you require guidance about applying for your First Home Loan or the First Home Owners Grant contact William at MacLean Finance 03 9802 0211, who is happy to answer all your questions.
With Interest Rates as low as 4.82%pa as an ongoing variable rate buying your first home now is an excellent idea.
