Property scene in 60 seconds: Home loans rise

By JP Pelosi · · 2 min read
Fact Checked
Advertiser disclosure
Home loan values are on the rise in 2021.

The news in brief

    1. After the 2020 lull, property prices are rising again in 2021.
    2. There is an evident 'fear of missing out', especially among younger buyers.
    3. Auctions have escalated and competition is hot, mostly in Sydney and Melbourne.
    4. A number of home loans cater to new entrants in the market with smaller deposits, lower fixed interest rates.
    5. A lower interest rate environment has helped overall confidence and a sense of economic stability. 

By the numbers: March property

$1.5m is the median property price at auction in Sydney, according to Domain.
$200,000 is the amount Westpac expects Sydney property values to rise by over the next two years.
$1m is likely to secure you a property in other cities such as Brisbane and Melbourne, based on median prices (CoreLogic).
2.32% p.a is the average 2-year fixed rate in Mozo's database at present, while the average 4-year rate is 2.36% p.a.
1.69% from Greater Bank (comparison 3.49%) is the lowest 1- year fixed rate in the Mozo database at present, 20bp lower than it was last month.
3.29% p.a is the average variable rate in our database right now.
1.99% from Reduce (comparison 2.05%) is the best variable rate in our database.
$29bn worth of home loans were taken out in January, a surge of 10.5% on the previous month, as per the Australian Bureau of Statistics.

Borrowing for a home? Here's what you need to know

Booming property prices - The pandemic was a setback. But recent activity suggests it was short-term. Such is the growth now that Sydney and Melbourne are set to see median home values rise by at least 12% over the next two years, says CommBank.

Very low home loan rates - We're in a low interest rate environment and this matters. According to Mozo Property Expert, Steve Jovcevski rock bottom home loan rates and increased positivity are fuelling this fire. For example, rates below the 2% mark are no longer a rarity, and the RBA’s bond purchasing activities have even helped push 4 and 5-year terms to new lows. 

Buyer interest is up - Driving the increase in sales volumes is the government’s HomeBuilder scheme, which has boosted property sales by more than 100 per cent compared to the previous year, says the Housing Industry Association. Since June 2020, take up has been largely limited to standalone houses, which require buyers to jump through fewer hoops than off the plan units.

On the hunt at Easter - Even if auctions are busy and big money is paid above reserve, this is just one segment of a much larger market. Not all properties go to auction and in fact, in some cities, auctions are less popular than private treaty sales. For example, in Brisbane and Adelaide clearance rates have been high, but on fewer than 100 sales in each city compared to Sydney and Melbourne. Check your area!

Need more? We can help answer some of your initial questions right here. Why not start by comparing some of the competitive offers in our home loans hub.