Weekly Wrap - Fri 24th July

We have had another massive week, including some very interesting updates coming through from the banks. There have also been some super interesting statistics and data on the market and how COVID has redefined what we call “The Great Australian Home Ownership Dream”.

How Covid has changed the market

With all of the changes surrounding COVID, there are a lot of questions being asked about whether or not people still want to buy, or whether it is better to wait. We’ve had some interesting survey results come in which help us to understand how Australians are feeling about launching into the property market. This particular survey has come from ING and was targeting mostly a millennial demographic. Some key highlights are:

  • Approximately 50% of Australian millennials believe that home ownership is now more achievable for them because of COVID
  • Many have used the lockdown to get on top of their budget
  • 50% are now redirecting money they would have spent on travel into their home savings
  • 50% believe they will be able to get into a property sooner
  • Many are now considering living further out of central business areas and commuting into an office one or two days a week, as working from home more allows them to do so

COVID has also impacted what people are looking for in a home, for example more may now be looking for three bedrooms and a study as opposed to four bedrooms.

People are now placing more weight on schooling zones and lifestyle aspects of a home rather than proximity to work. People are rethinking what represents great value, looking at what $1M can get them in the city versus what $1M can get them further out on the coast. Without the need to commute into an office five days a week, people are making different decisions about housing and we expect to see a lot more of that over the next 6-12 months.

There are now more prospective buyers than there is stock or property for sale. This shows how keen people are to get into the market, as we know there has never been a better time to be a first home buyer with the number of grants and offers available.

The article is available on our social pages, please do have a look there is a lot more great information in there.

Due to the pandemic, as well as less stock and a higher demand for property, we have also seen clearance rates lessen and days on market starting to come back. It is a very interesting time and we are now seeing home buying decisions being driven by different factors. 

Updates for self-employed borrowers

As little as three months ago we saw one of the major banks introduce a policy for self-employed clients, mandating a minimum 20% deposit, meaning they would not lend above an 80% LDR (Loan-to-Deposit_Ratio). Another major bank has just announced that they would start accepting self-employed clients that have been ABN registered for 18 months, as opposed to the 24 month minimum that most banks have traditionally required. This is a very big step, and with some banks now loaning up to 95% this is really great news for buyers, particularly the self-employed who are potentially the most hard-hit by the pandemic. This illustrates that the banks have very different offerings and in some cases are trying to attract very different borrowers. Some borrowers might walk into a bank one day and be told they need a 20% deposit and cross the road to another bank and be told they only need 5%. So if you’re considering a loan, please do chat to us as we can certainly help get you moving in the right direction. 

Lenders mortgage insurance for $1

Another exciting one for first home buys is the 85% lenders mortgage insurance for $1. For some context behind that, if we talked about the amount of deposit required to avoid mortgage insurance at the moment, for a client being able to raise that 10% or 15% additional deposit should they not have the full 20%,which might be saving us somewhere between $5,000 - $15,000 depending on the purchase price. One lender is offering that mortgage insurance for only $1. So it’s really great to see some banks coming out to further support first time home buyers. In some cases they are even trying to compete with the low deposit scheme, when they themselves are unable to offer it. 

Low deposit scheme updates 

Speaking of the low deposit scheme, the two banks offering it (Commbank and NAB) now both have waiting lists to get it. There are about 4,000 people on the commbank list and we expect the NAB list to catch up to that relatively quickly. Some smaller banks still have the ability to offer those really quickly, so please do reach out if you’re thinking about grabbing one. There are massive savings in mortgage insurance to be had so please reach out to us with any questions on that. 

Home builders grant updates

Next we’d like to talk about the home builders boost. We are now 6-8 weeks post the release of the $25,000 grant that is available for home builders and we have had some updates on guidelines from some of the banks. There has been some uncertainty on what the grant is for, for example whether it could be used for a deposit or as funds to complete. So if you have been on the holding pattern or on a waiting list to see what is going to happen with that, we encourage you to reach out to us as it is very much case by case about the qualification process. It is also about at what stage you are going to be able to access the money. 

Loan Market International Awards

Another exciting part of us in-house, we have our virtual international awards next week with Loan Market which is a great chance for us to celebrate the (financial) year that has been. So keep an eye out for that!

Thanks for tuning in and we look forward to chatting again next week.