Why first home buyers are racing into the property market now

By Polly Fleeting ·

On Tuesday, the Australian Bureau of Statistics (ABS) released data that revealed that the volume of first home loans has jumped to the highest point since late 2009. 

According to the data, in December of last year, the amount of first home loans for owner occupiers crept up by 6.2%, which equated to a monthly total of 9,606 loans. And the last time there was a larger monthly total was the same time of year ten years ago. 

Nationally, these new numbers account for almost a third (30.2%) of all owner occupier loans taken out in December across the country. 

“The good news is that First Home Buyer activity has stepped up even further since the start of this year,” Master Builders Chief Economist, Shane Garrett said. 

“The new First Home Loan Deposit Scheme is already a big success and the official data will show more big gains for First Home Buyer once they are released.” 

The First Home Loan Deposit Scheme was introduced by the Federal Government in 2019, and aims to help first home buyers get into the property market sooner by removing the burden of Lenders Mortgage Insurance (LMI) for borrowers with a deposit as little as 5%. 

10,000 slots for the scheme opened earlier this year across 27 different mortgage lenders, and according to the National Housing Finance and Investment Corporation (NHFIC), 10,000 more spaces are set to be created in July 2020. 

RELATED ARTICLE: 7,000 more slots  to open with the First Home Loan Deposit Scheme 

But for Mr Garrett, the new government initiative isn’t the only reason we are seeing an increase in first home loans. 

“There is a great opportunity for people to buy or build their first home at the moment,” he said

“Apart from the assistance offered by the new First Home Loan Deposit Scheme, interest rates are at their lowest in many decades and house prices have stabilised after dropping back from the highs reached in recent years.” 

Let’s take interest rates for example. According to Mozo’s database, the average first home variable rate for owner occupiers on the 1st of  December 2019 was 3.85%, while at the same time 5 years prior (1 December 2014) the average rate was 5.26%. 

So if you took out a loan of $400,000 over a 30 year term in 2014 at the average rate you’d end up paying $396,065 in interest over the course of the loan. If you took out the same loan in 2019 at 3.85%, you’d pay $275,084 - that’s a $120,981 difference. 

RELATED ARTICLE: Australia’s best refinance home loans for 2020 

The ABS data also broke down the amount of first home loans state-by-state, which proved that the ratio of first home buyers to other owner occupiers was at least a quarter across all the states and territories. 

The highest ratio was in Western Australia (43.2%) while the lowest came from their neighbours in South Australia (25.7%). Here’s a how the other states scaled up: 

State/TerritoryFirst home loans (% of owner occupier market) 
New South Wales                                               30.5%
Victoria                                              40.9%
Queensland                                              31.4%
South Australia                                              25.7%
Western Australia                                              43.2%
Tasmania                                              27.6%
Northern Territory                                              38.4%
Australian Capital Territory                                              32.6%

However, in terms of volume, the largest number of loans came out of Victoria with just over 3,500, followed by New South Wales which recorded just under 2,500 loans. 

RELATED ARTICLE: Why 2020 is the year of the first home buyer and property investors 

Looking for your first home loan? Check out the table below or jump over to our first home loan comparison tool for more providers.

First home loans 2020 - last updated January 16, 2021

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  • 2.88% p.a.
    fixed 3 years

    2.89% p.a.

  • 2.69% p.a. variable

    2.70% p.a.

  • 2.09% p.a.
    fixed 3 years

    3.67% p.a.

  • mozo-experts-choice-2020

    3.14% p.a. variable

    3.19% p.a.


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First home loans 2020


Essentials Variable 90

Owner Occupier, Principal & Interest

3.04% p.a. variable

3.06% p.a.

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Variable Home Loan

Owner Occupier, Principal & Interest

2.79% p.a. variable

2.80% p.a.

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Newcastle Permanent
Discounted Variable Home Loan (Premium Plus Package)

Owner Occupier, Principal & Interest

3.19% p.a. variable

3.59% p.a.

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Bank of Queensland
2 Year Intro Rate Variable Home Loan

Owner Occupier, Principal & Interest

3.19% p.a.variable for 24 months and then 3.76% p.a. variable

3.80% p.a.

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Heritage Bank
Variable Rate Loan (Home Advantage)

Owner Occupier, LVR 80-90%

3.47% p.a. variable

3.85% p.a.

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Mortgage House
Red Prime Home Loan

Owner Occupier, Principal & Interest

3.49% p.a. variable

3.56% p.a.

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*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. Different amounts and terms will result in different comparison rates. Full comparison rate schedules are available from lenders. Costs such as redraw fees or early repayment fees, and savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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