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.

Compare home loans - last updated 13 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Variable Home Loan 70

    interest rate
    comparison rate
    Initial monthly repayment
    3.10% p.a. variable
    3.12% p.a.

    Affordable home loan rate for buyers or refinancers.. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 30% deposit required.

    Details
  • Unloan Variable

    Owner Occupier, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    3.14% p.a. variable
    3.06% p.a.

    For refinancers only. 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 in as little as 10 minutes.

    Details
  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

    Details
  • Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    3.79% p.a. variable
    3.79% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required.

    Details