First home buyers are continuing to secure a significant number of loans, supported by government schemes, despite a notable withdrawal of investors from Australia's property market. New data from mortgage broker Loan Market indicates that first-time buyers are now the sole group applying for more loans compared to June.
This trend follows a slowdown in home buying after three interest rate rises and the Labor government's abolition of negative gearing for most investment purchases. The Australian Bureau of Statistics reported an overall fall in home loan demand by June, down 5.4% compared to the previous quarter. While investor loans dropped by 8.6%, first-time buyer mortgages saw a smaller decline of 2.9% on a seasonally adjusted basis.
Loan Market observed a 3% dip in first-timer applications in July, followed by a 10% increase into the first half of August on a weekly average. Applications from other owner-occupiers and investors remained largely steady in August compared to June. Peter Esho, CEO of 13x, suggested that first home buyers now perceive market sentiment to be in their favour, while investors feel it has shifted against them.
The government's 5% deposit scheme, which allows first-time buyers to borrow up to 95% of a property's value with a government guarantee, has played a role. Housing Australia, which manages the scheme, found that applicants typically saved over $15,000 in lenders' mortgage insurance (LMI) for the median deposit paid. The scheme has helped more than 320,000 people become homeowners since its inception in 2020, with participants collectively saving over $2.5 billion in LMI by the end of July.
More than 5,000 new guarantees were issued each month from February, with July seeing a slight dip just below 5,000, still exceeding any month before the scheme's expansion. ANZ, which joined the 5% scheme in March, was the only major bank to maintain a steady value of mortgage applications in the June quarter, with scheme participants accounting for one in every 20 new loan applications.