Aussies are on top of their home loans and millennials are in the property market - turning tides or just a phase?
In a recent turn of events, younger Aussies are now scoring big time on the property market at record levels, according to CommSec, and the number of delinquent home loans has dropped.
Despite experts saying that this may be just a phase in the property market, recent CommSec data shows a four-year-high for first home buyers, with the number of home loans issued increasing by 39% from last year.
The data also revealed a link between the property rush and stamp duty reductions in Victoria and New South Wales.
“Young Aussies keen to move out of home have been saving hard and been ably assisted by stamp duty reductions from the NSW and Victorian governments,” said Senior economist at CommSec, Ryan Felsman.
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“More loans are being taken out to buy or build homes and a key reason is the incentives being offered by various state governments to first home buyers.”
And as millennials rise to the responsibility of homeownership, data from ratings agency Standard and Poor’s (S&P) has revealed that the percentage of delinquent home loans dropped from 1.17% in July to 1.10% in August.
S&P believe that changes in economic conditions, the rise in employment opportunity and lower interest rates could be the reason for the improvement.
Mozo’s home loan data has shown a steady decline in variable interest rates over the last month, with an average reduction rate of 0.14%.
The three biggest variable interest rate changes in the last month
| Provider | Product | Previous Value | New Value |
|---|---|---|---|
| Community First Credit Union | Basic Variable Loan | 4.10% p.a. | 3.69% p.a. |
| Unity Bank | All In One Home Loan Package | 4.55% p.a. | 4.29% p.a. |
| HSBC | Discounted Value Home Loan | 3.85% p.a. | 3.65% p.a. |
While interest rates continue to fall, Mozo’s Home Loan Experts encourage Aussies to use this time as an opportunity to get ahead with their mortgages and shorten the lifespan of their home loan.
How to get ahead with your home loan
Make extra repayments when you can - Because who says you only have make the minimum repayment each month? For instance, say you pay an extra $100 a week on a $800,000 loan over 5 years. At the end of the 5 year mark, you’ll have paid off an extra $260,000!
Refinance your loan - What better inspiration than falling interest rates to refinance your loan? Our database is filled with loans currently below the 4.00% mark and if you’re new to refinancing, our guide can clear things up for you.
Change your repayment frequency - If your budget can take it, it might be worth switching up your repayment frequency. For example, turning your monthly repayments into fortnightly ones. This will help to reduce your loan quicker, meaning you pay less interest.
Take advantage of your loan's offset facility - Many loans have an offset account feature - use this to your advantage by stashing your extra savings here instead of a regular savings account to cut back on interest.
Wondering how much you could be saving by switching home loans? Check out Mozo’s Switch and Save Calculator
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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