First-home buyer activity highest in Queensland and Western Australia: Mortgage Choice

New research from Mortgage Choice has shown dramatic differences in the level of first-home buyer activity from state to state.

According to Mortgage Choice’s recent new home loan approval data, Queensland and Western Australian first-home buyers accounted for almost 1 in 5 loans in February this year, in comparison to New South Wales first-home buyers which accounted for less than 1 in every 20 loans written.

“New South Wales has the smallest percentage of first-home buyers entering the market. That said, this is largely unsurprising when you consider the state’s capital, Sydney, boasts the country’s highest median dwelling price,” said Mortgage Choice spokesperson Jessica Darnbrough.

“In addition, New South Wales no longer offers grants or stamp duty concessions to those first-home buyers purchasing an established property.”

By comparison, Queensland’s capital city of Brisbane has a lower median dwelling price in addition to certain stamp duty concessions for those first-home buyers in the market to purchase an established property.

The Daily Telegraph reported figures from Mortgage Choice as showing first-time buyers are spending up to $1.72 million on properties, fuelled by some small lenders allowing borrowers to hand over deposits of 3% or less.

This has prompted experts to warn the historically low-interest rate environment will not continue forever and servicing these large loans will eventually become tougher as interest rates increase.

Mortgage Choice broker, Jonathan Lee, told the Herald Sun that most lenders require 5% genuine savings from first-home buyers and the best way to achieve this is a change in lifestyle.

“A lot of first-home buyers are on good incomes but their lifestyle is more than what their income is. They need, in some cases, to stop spending as much for a couple months and they’ve got a deposit,” he said.

“It’s very important for them to have a good-sized deposit because costs including stamp duty, legal fees, inspections, that all has to come out of their deposit,” said Darnbrough.

She advised a good rule of thumb is for borrowers to determine whether they could cope with repayments at a rate of 7%.

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