Homebuyers continue to reap the benefits of banks improving their lending criteria, particularly for first-time buyers. Banks are competing for home loans by offering finance at more attractive terms, despite the current weak economic conditions.
What the statistics show
Statistics from ooba home loans
, show a 5.0% reduction in the Average Deposit required by banks from 14.0% in the second quarter of 2018 (Q2 18) to 13.3% of the Average Purchase Price in the second quarter of 2019 (Q2 19). During the same period, the Average Deposit for First-Time Buyers (FTB’s) dropped by a significant 25.2% from 12.3% to 9.2% of the Average Purchase Price.
Rhys Dyer, CEO of ooba home loans, says: “Almost 60% of home loan applications received in the second quarter of 2019 were from homebuyers who were looking for a 100% loan, who had no access to a deposit, which is over 6% up on Q2 2018’s statistic. The banks increased willingness to approve home loans with lower or no deposit requirements is giving homebuyers, particularly young FTB’s, an opportunity to enter the property market.”
Rhys continues: “In the FTB’s sector, certain banks are also offering finance in excess of the purchase price in order to assist buyers with the transfer and bond registrations costs”
A buyer’s market
Conditions at present are ideal for homebuyers, with more affordable property prices and with banks competing for a bigger share of the market by making credit more accessible and cheaper:
- Average Purchase Price in Q2 19 down by 0.6% on Q2 18, with FTB’s Average Purchase showing nominal growth of only 0.3%. In real terms, property prices are around 5% more affordable compared to the second quarter of 2018.
- Average Approval Rate up by 4.5% to 80.6% in Q2 19, compared to 76.1% in Q2 18.
- Average Rate that ooba home loans achieved for its homebuyers in Q2 19 was prime less 0.01%, 20 basis points cheaper than Q2 2018’s prime plus 0.19%
“The above indicators combined with lower deposit requirements illustrate how good conditions are for homebuyers looking to finance their property purchase,” says Dyer.
How to get the best home loan
Given the increased competition amongst banks for home loans and for new customers, Dyer advises prospective home buyers to use a home loan comparison service like Ooba home loans to search for the best loan in the market. Home loan comparison services do all the legwork for prospective buyers by approaching all the major banks, including the client’s own bank, to find their clients the most competitive finance deal.
Prospective homeowners can prepare and empower themselves by obtaining a home loan pre-qualification through ooba’s Bond Indicator and Qualified Buyers Certificate products. These provide buyers with a clear view of their credit score and credit profile, as well as a certificate outlining the house price range they can afford,” concludes Dyer.