A mortgage broker has reported a record 71% jump in home loan pre-approvals across the January to August period despite the backdrop of the COVID-19 pandemic, with August marking the highest volume of pre-approvals on record since 2014.
Aussie also shared first home buyers accounted for more than half (53%) of those pre-approvals, with the figure coming in 130% higher than the corresponding period last year.
New South Wales led the way in pre-approval volume, followed by Victoria, Queensland, and South Australia; however, it is worth noting that despite increasing volumes evidenced earlier in the year, Victoria has recently seen a sharp decline following the state’s economic restrictions.
“Overall, the figures show that borrowers are becoming smarter and better prepared before purchasing a property – which often is life’s biggest investment," said Aussie CEO James Symond.
“There’s a strong indication that people are giving themselves as much certainty as they can in an uncertain environment – and property seems to be where Australians seek that certainty to ‘bank on’ their future."
Symond hopes the record number of pre-approvals helps to sustain the busy spring activity typically evidenced in the real estate market this time of year.
He also voiced optimism the current market conditions around COVID could actually be enticing first home buyers rather than keeping them away.
"More Australians are coming to terms with the new normal as it impacts their day to day. For some people, the savings from lack of travel and social spending means a portion of the market are now ready to act on their property dreams," Symond explained.
“With interest rates at an all-time low and remaining low, there are people out there seeking the right opportunity."
The increase in consumer saving and low interest rate environment were then furthered by a ramp up in government support, Symond aptly pointed out.
“In addition to the market conditions, the increased government support over the past 6 to 12 months, is encouraging people to progress their property goals, many of whom are first home buyers," he said.
“First home buyers are recognising the opportunity in the current market conditions, while many are taking advantage of government initiatives such as the Federal Government's First Home Loan Deposit Scheme, which requires only a 5% deposit.
“All eyes will be watching on to see what the spring property season will bring this year. Based on these record pre-approval volumes, many Aussies have got their finances sorted and are ready to buy when the right opportunity comes along,” Symond concluded.
