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Home loan activity is at historically high levels, according to the latest data from the Australian Bureau of Statistics.

Australians committed to $31.4 billion of home loans in November, which was 6.3% higher than the previous month and 33.2% higher than the previous year. Owner-occupier borrowing was up 7.6% on the month and 17.2% on the year, while investor borrowing was up 3.8% on the month and 86.9% on the year.

Want to enter the market this year? Here are three home loan tips:

  • Maximise your credit score – pay all your bills on time and reduce your credit card limit
  • Get started early – it can take several weeks to get a home loan pre-approval
  • Speak to a broker – brokers can compare loans and access special deals on your behalf

With rents climbing steeply in many parts of the country, 2022 might be the ideal time for younger Australians to enter the market. The average rent paid by a tenant living in a capital city was 7.4% higher in the December quarter of 2021 than the same quarter of 2020, according to Domain.

So if you’re a first home buyer, you might be wondering – what can you do to save a deposit? Options include:

  • Increase your income – e.g. get a second job, do more shifts, start a side hustle !
  • Reduce your expenses – e.g. move to a cheaper rental property, cut back on home delivery, buy less ‘stuff’
  • Reduce your deposit – e.g. opt for a low-deposit loan, a family guarantee loan or a spot in the First Home Loan Deposit Scheme

Don’t worry if any of this sounds confusing – we can explain your options to you in plain English. When you’re ready to talk, we’ll be happy to guide you through the process.

There’s a house building boom going on right now, partly because of the now-concluded HomeBuilder incentive and partly because interest rates are so low. Building work started on a record 149,345 new detached houses in the year to September 2021, according to the latest data from the Australian Bureau of Statistics.

If you’re planning to build a new home, please note that financing residential construction projects is more complicated than getting a standard home loan.

Lenders require more paperwork – all the usual documents, plus a copy of your building contract, building plans and building specifications, as well as quotes for any additional work you might be planning.

The way lenders pay out the loan is also more complicated: instead of giving the money in one lump sum, they distribute it in five ‘drawdowns’ as the build reaches key milestones.

Australia’s property market enjoyed extraordinary growth during 2021, but a city-by-city breakdown shows that different markets are at different stages of their cycle.

Looking at a basket of all Australian homes, the median price increased 22.1% last year, according to CoreLogic. Looking just at the capital cities:

  • Sydney’s monthly growth rate peaked at 3.7% in March and was 0.3% in December
  • Melbourne peaked at 2.4% in March and fell 0.1% in December
  • Perth peaked at 2.7% in February and rose 0.4% in December
  • Hobart peaked at 3.3% in March and rose 1.0% in December
  • Canberra peaked at 2.8% in March and rose 0.9% in December
  • Darwin peaked at 2.7% in April and rose 0.6% in December

Brisbane (2.9% growth in December) and Adelaide (2.6% in December) are the exceptions to the rule, with both cities enjoying their strongest growth at the end of last year.

So the data suggests that Adelaide is in a strong growth mode, while the others are experiencing milder growth.

Thanks for reading my first newsletter of the year. As always our latest low interest rates can be found on our web site.  If you or your family need any sort of financial help in 2022, please get in touch Let’s hope we have plenty of good news on the health and economic fronts in 2022.

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