25% of mortgages go to first home buyers

First-home buyers accounted for 25% of all new mortgages in February according to new data, driven by the lowest interest rates in 20 years, increased Government grants, and falling house prices.

The February AFG Mortgage Index, released yesterday, reveals total mortgage sales jumped 40% from January. AFG expects that to grow, with a peak in first home purchases to occur before the 30 June expiry date of the increased Government grants.

The Federal Government has increased the grants to $14,000 for existing homes and $21,000 for new homes.

AFG has sold over $2.6 billion worth of mortgages in the last month, which it says is the highest amount since November 2007. First home buyers accounted for 26.1% of the total figure.

In more good news for the property sector, a new survey from Mortgage Choice also shows that the number of Australians planning to enter the housing market has doubled in the last 12 months.

The survey of 1000 people showed 76% are planning to buy a house, well up from the 40% rate recorded last year. Just under half of respondents claim that the increased Government offers were “too good to refuse”.

The survey shows a number of respondents flagged other reasons for buying, with 49% claiming low property prices as a reason and another 35% blaming expensive rents.

Over 70% plan to purchase existing homes rather than build, while 12% plan to use the money as investments. About 8% say they did not plan to save for a deposit.

But the survey shows home buyers are saving more, with 28% of respondents saving between $10,000 and $30,000, up from the 23% rate recorded 12 months ago.

Mortgage Choice senior corporate affairs manager, Kirsty Sheppard says the results are pleasing.

“With low interest rates and relatively stable housing prices top-of-mind for those interested in the property market, it is intriguing to see the change in attitude and inclinations of today’s pro-active first homebuyer.

“Australians who are about to buy their first home appear to be entering the market with more confidence than their predecessors.”

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