Home Loan Heads up.

The first home buyer party is now officially over. They’ve definitely left, but it shouldn’t be a shock and isn’t even really that sudden. In reality, they’ve been “going home” over the past three months in record numbers. October saw a massive drop in the number of first home buyers searching for loans, with levels at their lowest this calendar year. This confirms everyone’s inner fears that no big Boost equals no buyers. Also:


  • As we predicted last month, the new market drivers are refinancers and investors
  • The jump in investor enquires bodes well for future activity and is hopefully sustainable
  • The market is still “hot” overall, but people are not looking for loans to build with any urgency

    • It seems most first home buyers were trying to get in prior to the initial drop on the Boost. The big question now is whether the market for FHBs will return to normal levels, or whether the Boost has “front-loaded” activity and hence we will experience a period of very low FHB demand. Precisely as predicted last month, investors have moved back into the market in large numbers following a fall in equity markets. This trend has pushed up the demand for interest-only loans to their highest levels this year. Lenders should now be shifting their efforts from FHBs to investors. The rising interest rate environment is also having a particular impact on the market. Enquiries about fixed loans continues to be lower following the fall in September. It seems home owners have largely accepted that the “spread” is too great to warrant fixing rates. Yet rather than a shift back towards variable rate mortgages, growth in demand is occurring in the “split” loan product set.

    Observations by Dr. Adir Shiffman, CEO, HelpMeChoose.com.au