First Home Buyers rush to lock in loans before grant is reduced

Tuesday August 4, 2009

Almost half of Aussie broker appointments made online are for first home buyers

Aussie has seen a surge in the number of first home buyers requesting appointments with its brokers as they rush to lock in loans before the Federal Government starts to phase out the grant next month.

The number of first home buyers requesting appointments with Aussie brokers via the website www.aussie.com.au has jumped 20 per cent in the last five weeks, accounting for almost half of all appointments. In volume terms, it is the most number of appointment requests made by first home buyers since April, when the extension of the grant was announced.

Aussie CEO Mr Stephen Porges said as the September 30 deadline for the $14,000 grant for established homes is reduced to $10,500, and from $21,000 down to $14,000 for new homes, first home buyers have a limited amount of time to secure a property.

“When the Federal Government announced an extension to the Grant, a lot of people thought they had time up their sleeves,” Mr Porges said.

“The economy was looking very uncertain back in April, and many Australians thought they would wait until things started to pick up before taking the plunge into home ownership.”

Mr Porges said a combination of increased confidence, a lack of stock on the market during the quieter winter months and the realisation the Grant will be phased down from next month, and again at the end of the year has meant many first home buyers are now rushing to lock in a property contract.

“There are quite a few factors in play at the moment, including positive news on property prices across the country which will translate into a busy period over the next few weeks,” he said.

However, Mr Porges cautioned any potential first home buyers to do extensive research and carry out due diligence on any property they are interested in purchasing.

“There are still good deals around, but extra caution is needed in selecting the right property as the first home buyer’s grant has created a price bubble – which is exactly what the Reserve Bank has warned us against - in some areas,” he said. “There’s no point paying $20,000 or $30,000 over market value just to get $14,000!”

“Buying a property is usually the biggest investment decision people will make in their lives, and the stakes are high if mistakes are made,” he said.

Mr Porges said there can be traps for young people jumping into the market without the discipline of saving and having a financial buffer to cover their mortgages if they lose their jobs after settlement.

“As a direct result of the Global Financial Crisis, the Reserve Bank of Australia has slashed interest rates to historic lows to stimulate our economy,” he said. “And as the world recovers, it’s virtually certain rates will rise again, perhaps even as early as next month and buyers need to budget for this.”

As one of the country’s largest non-bank providers of financial services, Aussie has a loan book of over $30 billion. With the acquisition of Wizard, there are now over 140 retail shopfronts and 800 brokers across the country ready to help customers get a better deal on their finances.

An Aussie broker will offer guidance, assess eligibility, lodge the application and then support the first home buyer borrower through the home loan process. Aussie brokers are available 24 hours a day, seven days a week, in all capital cities and regional centres at the request of customers who call Aussie on 13 13 33.

For more information or to request an interview with Stephen Porges, or with a first home buyer please call:
Tim Allerton
City Public Relations
(02) 9267 4511

Brooke Stoddart
Aussie Home Loans
0438 677 588

Aussie's tips for first home buyers

Here are some important tips to help avoid the most common traps:

1. Work out how much you can afford to spend before you even look, and only look at apartments or homes clearly advertised within that price range. Do not waste your energy looking in the wrong suburb – because you may end up biting off more than you can chew.
2. Look at as many properties as possible in your price range to get an idea of what you can afford. Check with Aussie’s skilled mortgage brokers to work out what loan product suits your needs – especially your borrowing limit!
3. When working out the best home loan for you, check the ongoing payments, especially in the fine print for monthly service fees and other charges.
4. If you are worried about interest rate rises, you can split your loan between variable and fixed rates and take an “each-way” bet.
5. Make fortnightly payments, not monthly, so the interest on your mortgage does not add up.
6. Remember a low start-up interest rate, or honeymoon rate loan does not mean you will be paying less for your property in the long term.
7. Make absolutely sure your home loan repayments do not overly impact on your lifestyle. You do not want to only eat baked beans for dinner for the next 25 years.
8. Be prepared for the monthly repayments to rise and fall during the life of your loan. Make sure there is some financial room to move if rates rise. If rates fall keep paying the same amount each month or fortnight, so you pay off your loan quicker by eating into the principal owing.
9. The best step you can take in the search for your first place is get pre-approval for a loan, which Aussie and some other lenders can provide, so you know exactly what you can afford.

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