First home buyers may be compromising more to get onto the property ladder
Figures from a study conducted by Members Equity (ME) Bank has highlighted a number of trends in the still very busy property market. The data shows over two-thirds of first home buyers are accepting the need to compromise on certain requirements to buy a property, as well as the rise in solo applicants.
With a surging property market, we’re seeing new trends in home loans and home ownership that reflect the affordability of getting a foot in the door. The research from ME Bank can help us observe these shifts in the tendencies of first home buyers and gain an understanding into how consumers are adapting to the housing market during the COVID-19 pandemic.
What are first home buyers compromising on?
With the price of property and land rising, it may be self-explanatory that the most common compromise first home buyers are willing to make is to settle for a smaller property than preferred. Only a third of respondents in the property market under 40 years’ say they’ve purchased their ‘forever home’, proving that many first home owners are buying their first home as a stepping stone.
Financial support measures understandably ranked highly among respondents as well, with choosing a less-than-preferred area or home in need of renovations also recording significant results.
Top first home buyer compromises | Percentage of Buyers |
---|---|
Purchasing a smaller than preferred property | 35% |
Purchasing with less than 20% deposit which means paying Lenders Mortgage Insurance | 27% |
Getting financial support from family / having family act as guarantor | 26% |
Purchasing in a less preferred area | 25% |
Purchasing a property that needs renovations or repairs | 24% |
Buying an investment property to rent out before buying my first home | 16% |
Buying 'off the plan' to purchase a property not yet built | 13% |
Buying property with family and friends | 11% |
Other | 3% |
In a housing market that continues to surge, the research indicates first home buyers may be reassessing their selection criteria when it comes to purchasing. While it may be more expensive to purchase than ever before, getting a foot in the door isn’t impossible.
A Rise in Solo Applicants
A further trend uncovered by ME Bank highlights a rise in solo applicants applying for home loans, with single applicants accounting for 38% of all loan applications received by ME.
The increase in solo buyers comes despite property prices increasing to all-time highs during 2020, with the average loan size for single-mortgage applications rising 1% to $405,755.
Single females represented 49% of solo-applicants, down 1% from the prior year, while single males were more likely to enter the property market earlier, purchasing at an average age of 32 compared to 34 respectively.
Research from 2018 indicated the average age of buying into the property market was 35 for both women and men, meaning many Australians are entering the market younger.
ME’s Head of Home Loans and Personal Banking Claudio Mazzarella recommends the following tips for saving a deposit:
- Record and analyse your expenses to explore how much and where you could be saving.
- Prepare a budget and stick to it.
- Pay off your outstanding debt on credit cards or personal loans.
- Look around for saving accounts with high and consistent rates.
- Set up automatic deposits into a savings account.
- Look for ways to boost income and cut back on expenses such as living with family.
Compare home loans from a broad range of lenders over at our home loan comparison hub, or read up on how much you could borrow.
Home loan comparisons on Mozo - last updated 24 April 2024
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Unloan Variable
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Initial monthly repayment5.99% p.a. variable5.90% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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- 5.90% p.a.
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- 5.99% p.a. variable
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Express Home Loan
Owner Occupier, Principal & Interest, LVR <90%
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Initial monthly repayment6.01% p.a. variable6.14% p.a.Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
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- 6.14% p.a.
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Discounted Home Value Loan
Owner Occupier, Principal & Interest, LVR 70-80%
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Initial monthly repayment6.09% p.a. variable6.09% p.a.Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
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Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
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- 6.09% p.a. variable
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- 6.09% p.a.
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- 6.09% p.a. variable
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- 6.09% p.a.
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Read our Mozo Review to learn more about the HSBC Discounted Home Value Loan
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Basic Home Loan
Fixed, Investment, Interest Only, LVR <70%
interest rate
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Initial monthly repayment6.49% p.a.
fixed 2 years6.56% p.a.CompareCompareBasic Home Loan
- interest rate
- 6.49% p.a.
fixed 3 years
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- 6.55% p.a.
- interest rate
- 6.49% p.a.
fixed 3 years
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- 6.55% p.a.
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- $350
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Investment, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.29% p.a. variable6.20% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- Upfront fees
- $0
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- $0.00
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- $0.00
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- yes - free
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- yes - free
- Offset account
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- Maximum loan to value ratio
- 80.00%
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- $10,000
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- type of mortgage
- Variable
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- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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