What does the Australian home loan market look like?

Published on November 30th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Finding the right home loan to finance your home doesn’t have to be a headache with all the available options online. However, before you jump on the home loan bandwagon it’s always best to shop around and compare prices. Knowing your numbers will also help you have that added advantage of securing the right home loan. So, what does the Australian home loan market look like?

First time home buyers have a better footing

With investors vacating the property the market, first time home buyers are given the perfect opportunity to join with prices that becoming slightly affordable due to the cooling down of the property market. According to ABC news, first time home buyers are taking full advantage, accounting for 18% of all new loans. Although investor lending has fallen by 8% in the past year over the 11 of the past 12 months, first time home buyers are raking up the benefits of this vacuum to get loans that were up by 40% over the same period to secure loans for their homes.

Tip: Observing the property market constantly to find the best opportunity to invest in a home loan is essential. Shopping around and comparing a home loan will help you find the best deal for your needs.

The price to finance a home in each state differs

Home loans are a big deal to Australians, and we don’t play when it comes to finding the best deal that matches our financial needs. Research released by Finder on home loans showed that the total value of loans written in November 2017 was at the value of $24 billion. The average loan size was $388,900, with first time home buyers opting for the average home loan of $327,100. Depending on which state you are planning to buy your house at the prices will differ.

Tip: Knowing the price you must pay to secure your first home in any state or territory is important. This will help you find the right home loan to adequately finance your home needs without having to hurriedly look towards alternative methods to act as a patch up.

Find a discount where possible

Buying a house in Australia is expensive. Depending on where you are buying your house you could expect to pay anything between 28% – 35% of your income towards your mortgage. If you are a first time home buyer the financial burden could be eased by the First Home Owner Grant that will bring you one step closer to owning your home.

Tip: Research is your best friend when it comes to finding the best deals and discounts for your home.

Live within your means

Unfortunately, the mortgage debt continues to create a financial burden for many Australians. Despite the cash rate being held at 1.5%, mortgage prices are becoming unaffordable for many Australians. A study by IMF showed that household debt has risen to 100% of the GDP, resulting in people taking out loans that push them further into debt.

Tip: Always find a property that is within your means. Find adequate finance that will help you reach your goal of owning your property, rather than pushing you into debt. If you have to re-adjust your significantly in order to meet your home loan repayments, it’s time to find a new one that isn’t costly to maintain.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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