Signs of life are returning to the home loan market, with the latest figures released by the Australian Bureau of Statistics (ABS), analysed by RateCity, showing the highest number of borrowers taking out a home loan for almost three years.
According to the report, there were 52,259 home loans financed in May 2012. This is the highest level since November 2009 (based on original data).
There were over 9,000 more home loans financed in May compared to the previous month, which is an increase of 21.6 percent. According to RateCity, this is also the highest month-on-month percentage increase in three years.
First home buyers were also hitting the property market harder in May, with 9,303 home loans financed to new buyers, which was 2,088 more than in April. And for the first time this year, the percentage share of first home buyers out of all home loans financed grew to 17.8 percent, according to RateCity.
Michelle Hutchison, RateCity’s Spokesperson, says these results could signal the end to the slow lending environment.
“Signs of life are returning to the home loan market and more borrowers are comparing their home loan, switching to better deals or borrowing for the first time. We’ve also seen record numbers of traffic to RateCity in May, almost double the number of home loan enquiries in 12 months.
“Interest rate reductions have made home ownership more affordable for many Australians, with the average standard variable rate at a two-year low currently at 6.39 percent according to RateCity’s database of more than 100 lenders.”
Ms Hutchison’s tips on how to take advantage of the current lending environment:
– Borrowers should shop around for a home loan using credible financial comparison websites like RateCity to compare their existing home loan to other lenders or find some of the best deals to suit them.
– Knowledge is key so the more you know and understand about the home loan market will increase your chances of successfully negotiating for an even better deal.
– Borrowers should also use the low interest rate environment to get ahead of their home loan and make higher repayments. For instance, by adding just $50 each month to a $300,000 home loan with a projected average rate of 7 percent, you could potentially save over $38,000 over the 30-year loan term and reduce the term by over two years.