Spring break Mortgage borrowers go wild!

Spring is the time of the year when both the residential property and mortgage markets thrive – just be careful you end up with the right house and the right mortgage.

August 26, 2009
By Jackie Pearson.

Real estate agents call it the Spring Harvest. Across Australia, September and October are traditionally the busiest months of the year for buying and selling real estate and, as a consequence, the mortgage market booms.

This Spring time however, will be a mortgage season with a difference. The scaling back of the First Home Owners Boost from October 1 could see first-time buyer activity fall which may impact on the season’s activity.

Investors, however, are poised to re-enter the market. They’re hoping to mop up some bargains from vendors who left it too late to sell to rushed first-timers. So who will benefit most in the coming mortgage season – the buyer or seller?

There’s still time to benefit from the tail end of the government’s Boost payments for first home buyers if you have a suitable house to sell. Some experts still expect there to be elevated first home buyer activity between October 1 and December 31, when the boost ends and the FHOG returns to $7,000.

“First home buyers are out in full force and some are almost in a panic to get into the market before the end of the FHOG Boost,” says Heidi Armstrong, director of the State Custodian Mortgage Company.

Those with properties to sell that would appeal to investors are likely to do very well this mortgage season according to Armstrong. “We are definitely seeing the return of investors to the property market.”

David Airey, president of the Real Estate Institute of Australia (REIA) says activity in the investor market will be high for properties that are “well-located, near existing transport and infrastructure, low maintenance and with a combination of sound rental return and good prospects for capital growth.”

Airey says the market is beginning to settle back into its usual pattern of 10-15 percent first home buyers, 10 percent investors and 75 percent of people who are trading up.

“Now is obviously a good time to buy if you are a first home buyer,” says Armstrong, because you still have time to take advantage of the Boost, “provided you don’t go crazy and pay more than the property is worth.”

Finding the right home loan

Whether you’re buying for the first time or refinancing it is essential to save some of your energy for researching and comparing home loans . It could save you more than $50,000 or knock years off the life of your loan.

For example, if you selected a standard variable home loan with a comparison interest rate of 5.97 percent p.a., monthly repayments for a $275,000 loan over 25 years would be about $1,767.

By choosing a State Custodian standard variable loan with a 4.86 percent p.a. comparison rate, monthly repayments would be about $1,585, a saving of $182 per month or 2,184 per year compared to the previous loan. Over the life of the loan, you could potentially save more than $54,600.

Always check the terms and conditions of each home loan you consider to make sure it has the flexibility you require and to get the most out of your investment.

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