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With affordability at its lowest level on record, first-home buyers are thinking outside the square.
The home-ownership dream rarely used to feature a sibling in your bathtub and a parent on your certificate of title. These days though, first-home buyers are prepared to be flexible.
Housing affordability fell to record lows in the March quarter this year according to the latest Housing Industry Association-Commonwealth Bank report. Mortgage payments accounting for 30.7 per cent of total first-home buyer income these days!
Generations X and Y are also settling down later meaning for many home ownership is a solo battle.
It’s not surprising then that increasing numbers of first-home buyers are teaming up with siblings, parents or friends in a bid to break into the property market.
“There’s been a noticeable trend towards family members buying property together, as property prices are still very high, particularly for first-home buyers,” says Aussie Home Loans boss John Symond.
The number of family members taking out mortgages together has jumped from about 1% of all loans originated by ‘Aussie’ to 5 per cent over the past two years! Mortgage Choice has reported a similar trend. A survey carried out by the company last year revealed more than 6 per cent of people who bought property within the past two years had done so with family or friends. And of those who intended to buy property within the next two years, over 8 per cent intended to do so with family or friends!
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Home buyers are flocking back to variable rate mortgages which now account for 91% of the residential lending market, their highest proportion in four months.
Mortgage broker Mortgage Choice reported in April basic variable mortgages accounted for 48.15 per cent of all home loans approved - up nearly one per cent from March, while standard variable mortgages comprised 42.77 per cent of the market, down 1.47 per cent from March.
Basic variable loans generally have fewer loan features than a standard variable loan.
Fixed rate loans accounted for four per cent of all approvals up a percentage point from a month earlier.
Basic variable loans have been the most popular loan type though for four months after overtaking standard variable for the first time in January 2009!
Rates charged on variable home loans move in line with interest rates set by the Reserve Bank of Australia which successively cut its overnight cash rate since September last year to a 49-year low!
And despite interest rates being at their lowest in decades, the sensitive global and domestic economic climate is having a strong influence over loan product preferences.
Consumer conservatism with rates and fees continues to win out against loan flexibility and extra features.
Line of credit loans in April, popular with property investors, posted a fall, five per cent down from the previous month.
Commitments for owner-occupied housing rose 4.9 per cent in March, seasonally adjusted, to 59,793, Australian Bureau of Statistics data showed this month.
Total housing finance by value rose 6.7 per cent in March, seasonally adjusted, to $20.688 billion, based on the latest data available.