Looking at property in 2021? Low interest rates set up a good time to buy

Property owner holding house keys in 2021

The new year offers plenty of promise for Australian home buyers: home loan rates are set to stay at record lows for at least the next three years, while house prices have rebounded for the third month running. 

Nationally, home values rose by another 1% last month, according to the latest figures from property data platform Corelogic.

Regional markets were the standout player. Their annual home values outperformed the capital cities by more than three times (7% growth, compared to 2%), thanks to a trend of Australians seeking out ‘tree changes’ amid work-from-home arrangements. 

Now with 2020 behind us and things continuing to swing around for the property market, could 2021 be the right time to buy your first or next home? 

Mozo’s property expert, Steve Jovcevski says the start of 2021 is a particularly good time for first home buyers to get their foot on the ladder as house prices will likely increase in the months to come. 

“The prediction is that the property market will do really well this year and surpass the 2017 price peak,” he says.

Or in economist Dr Andrew Wilson’s words, “the jeopardy of waiting [is] if you don’t buy early, then you’ll be paying more as [time] progresses.”

Perfect storm for first home buyers

Jovcevski says that besides price, a number of other factors are also colliding to create the perfect storm for first home buyers.

“Interest rates are so low right now that they would boost your repayment power over the next few years,” he says. 

“Plus it’s going to be easier to get a home loan from March onwards, once legislation is passed to remove lender responsibility and put the onus back on the borrower to disclose their expenses and income accurately. 

“Government incentives, like the Homebuilder Scheme and another round of the First Home Loan Deposit Scheme coming through in January, will also prop [first home buyers] up.” 

To go hand-in-hand with this, the NSW government also announced temporary stamp duty exemptions for first home buyers purchasing newly built homes.

What if I’m buying my second or third home?

It’s a different story if you’ve got a property to trade in - that is, you’re already a homeowner and want to sell your current house before buying again. 

Wilson says that in that situation, you can “take advantage of both ends with prices rising”. 

“If you wait, you’ll probably get a higher price as a property owner and that will help you fund the higher price once you’re a property buyer,” he says.

Homebuyers checklist

However, timing shouldn’t be your only consideration. There’s also the matter of whether your financial position right now can handle such a big purchase. To qualify for a home loan, you need to prove your ability to service that loan. This generally means that you have:

  • A good savings history - You have proof of genuine savings (money you’ve held for at least three months). Lenders will typically ask for at least 5% of the purchase price to be genuine savings.
  • A solid repayment history - You always pay your rent and bills on time. Especially with the introduction of Comprehensive Credit Reporting, it’s become easier than ever for the lender to see if you’ve missed repayments with other banks and providers.
  • Little to no debts/liabilities - Aim to pay off all your personal loan or credit card debt before applying for a home loan. And if you have an existing credit card, look to reduce its limit as your credit limit will count towards your liabilities, regardless of whether you use it or not.
  • A secure job - Lenders want to see that your income is stable, so being in a full-time permanent position or in a job for at least 12 months is a huge plus. However, if you’ve lost your job or switched employment due to COVID-19, Jovcevski says explaining this to your lender can make them more lenient towards your case.

Ticked all of the above boxes? Then your next step is finding the best home loan for your property needs. Get started with a few low rate deals below, or jump on over to our home loans comparison table to weigh up even more options from over 80 different lenders.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can compare more home loans here.
Last updated 22 July 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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.

  • Optimum Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Lock in a competitive interest rate and enjoy peace of mind for the fixed period. Available for owner occupied new and refinanced home loans with at least 20% deposit. Split option available as well as offset and redraw. Noapplication, ongoing or banking fees. Third Party fees may be applicable - payable within loan repayments. Extra repayments up to $20K per annum permitted. Apply online, 100% member owned credit union.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Flexibility to choose your repayment schedule (weekly, fortnightly or monthly). Redraw facility available. Split your home loan into multiple loan accounts.

  • Optimum Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Lock in a competitive interest rate and enjoy peace of mind for the fixed period. Available for owner occupied new and refinanced home loans with at least 20% deposit. Split option available as well as offset and redraw. Noapplication, ongoing or banking fees. Third Party fees may be applicable - payable within loan repayments. Extra repayments up to $20K per annum permitted. Apply online, 100% member owned credit union.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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.

  • Express Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <90%
    Interest rate
    6.01 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,001
    Go to site

    Get 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.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Flexibility to choose your repayment schedule (weekly, fortnightly or monthly). Redraw facility available. Split your home loan into multiple loan accounts.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.54 % p.a.
    Fixed 2 years
    Comparison rate
    7.10 % p.a.
    Initial monthly repayment
    $3,174

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

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