First home buyers are flocking to the suburbs

First home buyers are flocking to the suburbs

Aussies are snapping up their first homes in the outer suburbs, a big bank’s data reveals, eschewing the trend of living in city centres as modern lifestyles evolve.

The value of owner-occupier loans reached a record high in October, according to the Australia Bureau of Statistics (ABS) -- and driving 35 per cent of these commitments were first time home buyers.

Now data from NAB is offering insight into where first time buyers are choosing to make their homes.

The big bank experienced a 21 per cent lift in first time buyers over the year -- a timeframe that covers the disruption brought by the pandemic.

And the number of them picking up a property in a regional area surged by 44 per cent in the three months to October.

“First home buyers are back in the market at levels we haven’t seen for a decade,” Andy Kerr said, executive of home ownership at NAB.

“Demand has been supported by historically low interest rates and more government support, such as the First Home Loan Deposit Scheme and HomeBuilder.

“A brief pullback in property prices also helped (them) as the uncertainty of COVID-19 put many plans on ice.”

Where exactly are they buying?

About 57 per cent more first time buyers purchased a home in regional New South Wales, in areas including Ballina, Port Macquarie and the Central Coast. Another 17 per cent purchased a place in metro areas, such as western Sydney’s Abbotsbury, Campbelltown and Penrith.

Western Australia followed closely with 55 per cent more first time buyers purchasing a home in regional areas, trailed by Queensland at 44 per cent, SA and NT at 36 per cent, and Victoria and Tasmania at 30 per cent.

“Flexible working arrangements implemented due to COVID-19 are encouraging many Australians to consider a tree or sea change as easy access to the CBD moves down the priority list,” Mr Kerr said.

“Many are seeing the potential of more land and a more relaxed lifestyle with easy access to areas like the Blue Mountains in NSW and Great Ocean Road in Victoria proving very popular.”

The shift has seen regional home prices grow at more than twice the rate of city properties. Regional home values lifted by 5.7 per cent in the last 12 months, according to CoreLogic, compared to the 2.4 per cent increase of capital city home values.

What’s encouraging first home buyers to sign now?

All time cheap mortgages coupled with government support and handouts are giving people the confidence to buy their first homes.

The cash rate -- a marker used by banks to set interest on mortgages -- is at 0.10 per cent, a level not seen before. And the Reserve Bank of Australia has said it’s likely to stay that low for three years.

The government has also helped by making it easier for people to sign up to a home loan. The first home loan deposit scheme makes it possible for people to secure a mortgage with a 5 per cent deposit -- and they don’t have to worry about saving thousands more for lenders mortgage insurance, because the government guarantees the other 15 per cent shortfall.

There were two tranches of the first home loan deposit scheme made available this financial year, giving 20,000 people a hand in entering the property market. Those part of the second tranche would’ve had to purchase a new or newly built home in order to qualify.

But they could’ve also benefited from the government’s Homebuilder scheme. It offers eligible people a $25,000 grant if they spend from $150,000 to $750,000 to either renovate or build a new home.

These two subsidies -- coupled with record cheap mortgages -- likely helped the home loan market bounce back from the disruption of the pandemic, and then reach a new record of loan commitments signed in October.

A breakdown by postcode

NSW

Greater Sydney

2127 – including Newington +70%

2150 – including Parramatta +66%

2174 – including Abbotsbury +157%

2560 – including Campbelltown North +48%

2570 – including Camden & Oran Park +38%

2747 – including Llandilo & Cambridge Park +54%

Outside Sydney

2259 – including Wyong (Central Coast) +111%

2287 – including Wallsend (Newcastle) +65%

2444 – including Port Macquarie +143%

2478 – including Ballina +148%

VIC

West of Melbourne CBD

3217 – including Armstrong Creek +97%

3216 – including Waurn Ponds & Belmont +56%

3338 – including Melton South +38%

3029 – including Tarneit & Hoppers Crossing +22% (postcode with most lending to FHB in the state)

East of Melbourne CBD

3196 – including Chelsea and Edithvale +60%

3175 – including Dandenong +50%

3174 – including Noble Park +32%

3978 – including Clyde +32%

3810 – including Pakenham +27%

3977 – including Cranbourne +23%

Queensland

South-east

4118 – including Browns Plains (Logan City) +106%

4209 – including Coomera (Gold Coast) +94%

4300 – Greater Springfield (Ipswich) +67% (most lending)

4305 – Central Ipswich +93%

4306 – including Karrabin (Ipswich) +58%

4509 – including North Lakes (Brisbane) +99%

North and west

4817 – including Hervey Range and Bohle Plains (Townsville) +64%

4825 – including Mount Isa +115%

WA

Perth

6061 – including Nollamara & Mirrabooka +107%

6062 – including Morley +78%

6107 – including Cannington +63%

6110 – including Huntingdale +91%

6112 – including Armadale +63% (most lending)

Regional

6430 – Kalgoorlie +62%

6530 – Geraldton +117%

SA

5085 – including Clearview and Enfield +52%

5086 – including Oakden and Hillcrest +51% (most lending)

5108 – including Salisbury +68%

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Learn more about home loans

How long does Bankwest take to approve home loans?

Full approval for a home loan usually involves a property valuation, which, Bankwest suggests, can take “a week or two”. As a result, getting your home loan approved may take longer. However, you may get full approval within this time if you applied for and received conditional approval, sometimes called a pre-approval, from Bankwest before finalising the home you want to buy.  

Another way of speeding up approvals can be by completing, signing, and submitting your home loan application digitally. Essentially, you give the bank or your mortgage broker a copy of your home’s sale contract and then complete the rest of the steps online. Bankwest has claimed this cuts the approval time to less than four days, although this may only happen if your income and credit history can be verified easily, or if your home’s valuation doesn’t take time.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Can I apply for an ANZ non-resident home loan? 

You may be eligible to apply for an ANZ non-resident home loan only if you meet the following two conditions:

  1. You hold a Temporary Skill Shortage (TSS) visa or its predecessor, the Temporary Skilled Work (subclass 457) visa.
  2. Your job is included in the Australian government’s Medium and Long Term Strategic Skills List. 

However, non-resident home loan applications may need Foreign Investment Review Board (FIRB) approval in addition to meeting ANZ’s Mortgage Credit Requirements. Also, they may not be eligible for loans that require paying for Lender’s Mortgage Insurance (LMI). As a result, you may not be able to borrow more than 80 per cent of your home’s value. However, you can apply as a co-borrower with your spouse if they are a citizen of either Australia or New Zealand, or are a permanent resident.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

Why should I get an ING home loan pre-approval?

When you apply for an ING home loan pre-approval, you might be required to provide proof of employment and income, savings, as well as details on any on-going debts. The lender could also make a credit enquiry against your name. If you’re pre-approved, you will know how much money ING is willing to lend you. 

Please note, however, that a pre-approval is nothing more than an idea of your ability to borrow funds and is not the final approval. You should receive the home loan approval  only after finalising the property and submitting a formal loan application to the lender, ING. Additionally, a pre-approval does not stay valid indefinitely, since your financial circumstances and the home loan market could change overnight.

 

 

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

Does Australia have no-deposit home loans?

Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

However, some lenders allow some borrowers to take out mortgages with a 5 per cent deposit.

Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.

How much money can I borrow for a home loan?

Tip: You can use RateCity how much can I borrow calculator to get a quick answer.

How much money you can borrow for a home loan will depend on a number of factors including your employment status, your income (and your partner’s income if you are taking out a joint loan), the size of your deposit, your living expenses and any other debt you might hold, including credit cards. 

A good place to start is to work out how much you can afford to make in monthly repayments, factoring in a buffer of at least 2 – 3 per cent to allow for interest rate rises along the way. You’ll also need to factor in additional costs that come with purchasing a property such as stamp duty, legal fees, building inspections, strata or council fees.

If you are planning on renting the property, you can factor in the expected rental income to help offset the mortgage, but again it’s prudent to add a significant buffer to allow for rental management fees, maintenance costs and short periods of no rental income when tenants move out. It’s also wise to factor in changes in personal circumstances – the typical home loan lasts for around 30 years and a lot can happen between now and then.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

How much deposit will I need to buy a house?

A deposit of 20 per cent or more is ideal as it’s typically the amount a lender sees as ‘safe’. Being a safe borrower is a good position to be in as you’ll have a range of lenders to pick from, with some likely to offer up a lower interest rate as a reward. Additionally, a deposit of over 20 per cent usually eliminates the need for lender’s mortgage insurance (LMI) which can add thousands to the cost of buying your home.

While you can get a loan with as little as 5 per cent deposit, it’s definitely not the most advisable way to enter the home loan market. Banks view people with low deposits as ‘high risk’ and often charge higher interest rates as a precaution. The smaller your deposit, the more you’ll also have to pay in LMI as it works on a sliding scale dependent on your deposit size.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Can I get a NAB home loan on casual employment?

While many lenders consider casual employees as high-risk borrowers because of their fluctuating incomes, there are a few specialist lenders, such as NAB, which may provide home loans to individuals employed on a casual basis. A NAB home loan for casual employment is essentially a low doc home loan specifically designed to help casually employed individuals who may be unable to provide standard financial documents. However, since such loans are deemed high risk compared to regular home loans, you could be charged higher rates and receive lower maximum LVRs (Loan to Value Ratio, which is the loan amount you can borrow against the value of the property).

While applying for a home loan as a casual employee, you will likely be asked to demonstrate that you've been working steadily and might need to provide group certificates for the last two years. It is at the lender’s discretion to pick either of the two group certificates and consider that to be your income. If you’ve not had the same job for several years, providing proof of income could be a bit of a challenge for you. In this scenario, some lenders may rely on your year to date (YTD) income, and instead calculate your yearly income from that.