top of page

First home buyers returning to the market? Now that's a good news story!

Hold up. Is that right that we are seeing First Home Buyers coming back into the market? With interest rates remaining persistently high with no breather in sight, for some time, First Home Buyers have decided to delay entering into what could be called a more challenging market.

The prospect of making repayments in excess of 6% interest rate and for many, the reduced capacity to borrow as much as they could 12 - 24 months ago, has up until now had an impact on large number of first home buyers buying a property. However, have we finally reached a tipping point where first home buyers are re-entering the home buying market?

As a Mortgage Broker, for those first home buyers who are now starting to come across my desk, the tipping point is rent. With increasing rent pressures, for some first home buyers, even in the current high interest rate market, their rent is starting to exceed their likely home loan repayments, That 'tipping point' is leading to greater enquiries by young buyers who want to 'crunch the numbers' to see what they can afford to borrow. Their argument is that they may as well buy a property, rather than continue to pay high rent to a landlord on a place that is not their own.

The second change I am noticing is a willingness for some first home buyers to adjust their expectations (and their desired purchase price) from where they were two years ago. Rather than giving up on the dream to buy their first home altogether, these first home buyers are open to adjusting their potential purchase price lower, based upon what they can borrow now. It means looking at properties - and even suburbs - that they had not considered before and working out what they now consider 'negotiable' and 'non negotiable' when looking at potential properties. They are asking themselves 'what can I live without' and what is a 'deal breaker'. This open mindedness is creating opportunities for some first home buyers where there had been none before.

Lastly, what the last few years has done for many first home buyers who have been forced to compromise their lives comes in the form of savings. Whether their compromise was to stay at home longer (or even move back home) or to live in a 'share house' arrangement, it has given these first home buyers the chance to continue saving while they have not been in the market. They have missed the `12 interest rate rises which so many home owners have endured. Rather, these first home buyers who are approaching me now have in fact saved very good deposits. In some circumstances, parents have also offered added support by gifting them money. They are in a better situation, from a deposit point of view, than where they were a year or two ago.

With Government support via the First Home Guarantee Scheme (FHGS) still available (where first home buyers can buy a property with as little as 5% deposit, thereby avoiding Lenders Mortgage Insurance), this is giving first timers an extra helping hand. Even for those with a good deposit who may find themselves only slightly in mortgage insurance territory, they are being able to avoid it all together by going with one of the banks where they can secure a place in the FHGS. Every little bit helps.

So one could now argue that all is not necessarily lost, as per what we hear on a day to day basis. There is a light at the end of the tunnel and for some first home buyers, it is now just around the corner.


Featured Posts
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square
bottom of page