NSW records the largest first home loan increase but is not the most affordable market

According to new data from the PRDnationwide Q1 Key Market Indicators report, New South Wales has recorded the largest increase in first home buyer loans within the September quarter between 2016 and 2017.

First home loans jumped by 70.9% within the September quarter between 2016 and 2017. The Australian Capital Territory also recorded a strong increase of 64.4%, followed by the Northern Territory at 37.9%.

But it was the ACT that took out the title as Australia’s most affordable market with a home loan affordability index of 54.2 points, which grew by 8.6% - NSW had an index of 27.7 points.

“There are a lot more people now living in the ACT who are going to need homes, and many of them are first home buyers," she told the Domain Group.

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But Mozo Property Expert, Steve Jovcevski is not too surprised by the sudden growth in first home loans.

“Because APRA capped interest-only lending at 30%, it’s forced investors to move out of the market and allowed first home buyers to compete more at auctions,” he said.

“Latent buyers who gave up on homeownership are also now re-entering the market because they can afford it.”

However, Jovcevski warned that this sweet period for first home buyers will come to a crashing halt “within the next few months” and has issued some advice to young Aussies thinking about entering the market.

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“Rates for investors are dropping, so get in now because it’s going to change again. And if you’re a first home buyer, try to lock in your repayments with a fixed rate for a few years.”

And given the recent news that all four big banks have made cuts to a number of fixed rates within the last week, it could be time for many Aussies to grab a discount.

Smaller lenders also seem to be following in the footsteps of major institutions, with online provider Reduce shaving 10 basis points off their Rate Lovers Variable product just this morning - the rate now sitting at a low 3.39% (3.74% comparison rate*)

And according to the Mozo database, Reduce have also dropped their Rate Buster High Lend product, with the new rate down to just 3.49% (3.49% comparison rate).

So if you’re a first home buyer keen to enter the market, check out Mozo’s home loan comparison tool to compare some of the current deals on first home buyer loans.

*The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a home loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years, and applies only to this example.