Property ups and downs: Are you thinking of applying for a home loan?

Man is buying a house

Property sales rates are at a low by historical standards, according to Westpac’s Housing Pulse May 2023 report. To put it in perspective, the activity within the housing market is operating at about two-thirds of the peak in late 2021.

Maybe it’s because not enough people have the means to purchase property right now, or homeowners are reluctant to sell. 

So, while your goal might be to own your own home, perhaps you’re uncertain about whether it’s the right time.

Let’s take a look at some of the pros and cons that might help you to make the best decision for you.

Affordability and tight supply in housing

Man and woman are at an auction for the same house

There are some challenges within the real estate market this year and this can make it tricky for first timers. 

For example, inflation remains high, interest rates on home loans continue to rise and the property market is tentative at best. Further still, a distinct lack of affordability has most buyers stretched thin. 

These factors may have contributed to an increase of 3% in property prices across the five major cities in Australia, based on data from Westpac’s Housing Pulse May 2023 report.

Also, a tight supply of housing doesn’t present a great outlook - especially when it can’t keep up with ongoing demand.

Feeling that uncertainty is completely understandable, but there are some upsides to the current market and what we might expect to see in the near future. 

Property prices stable and rates could ease up

The property market is forecasted to be relatively stable for the rest of this year. This can be attributed to a few things, according to property expert Michael Yardney.

These include: 

  • The property market has bottomed out and we are moving into the next phase of the property cycle.
  • Lower listing volumes (fewer properties for sale) are helping protect the market from further downward pressure.
  • The fixed rate cliff has been a concern but Reserve Bank of Australia data indicates the majority of mortgage debt is on variable terms.

While the cash rate currently sits at 4.10%, meaning home loan interest rates are on the higher side, Westpac reports that the RBA may be easing these rate movements in 2024. 

This could mean a more stable and competitive interest rate on home loans.

If you’re interested in buying a home now, or would like to ensure you have enough funds in the account, there are some avenues to take. 

Options? Home loans and buyer grants

Home loan comparison: a stack of coins with various heights, underneath a row of houses.

The government has options for first time buyers. For instance, you might apply for a First Home Owner Grant (FHOG) if you’re eligible. To be considered, this will have to be your first property of residence. The amount you might receive on your grant to assist you in the purchase will also depend on your state.

Then there’s the cost of your home loan. You might need to use a certain amount of your savings to cover the initial deposit on your property (often 20% of the property value, sometimes a bit less). But of course, that’s just the start - you need to afford ongoing repayments! 

Choosing the right home loan can help you get there. There are many factors involved, including the interest rate you’ll be charged, whether it will be for a fixed period or move variably with the official cash rate, and even ongoing fees. 

In brief, there are two types of interest rates you can select for a home loan:

  • Fixed interest rate. For a period of time, you will be locked in on paying a fixed amount of the interest.
  • Variable interest rate. The interest will depend on your lender and other factors like inflation. It has the potential to be higher or lower than the fixed interest rate.

Ultimately, securing a home loan is a big decision. It’s important to make sure you’ve done your research so that you know your options. It can be something like figuring out the best loan-to-value ratio to meet your needs. Or, it could be ensuring that your interest rate and repayment plan are the most compatible for you by weighing up your options.

At Mozo, we make these comparisons hassle-free. If you’re ready to take this next step on your property journey, you can start comparing your options below!

Home loan comparison table - last updated 28 May 2024

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

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Compare
    Details
  • Discount Variable Home Loan

    Owner Occupier, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a. variable
    6.01% p.a.

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

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    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% 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).

    Compare
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

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