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After months of speculation the mortgage industry has been buoyed by the news last night that an extension of the increased first home owner grant was included in the federal budget.
The increased grant will be extended until September 30, Wayne Swan announced last night, after which it will be phased down to $14,000 for new homes and $10,500 for existing homes until the end of the year.
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The extension is welcome news for brokers for whom first home buyers have provided a strong business flow in the past six months.
Yesterday’s housing finance figures from the ABS showed housing finance rose a further 5 per cent in February, representing a 24 per cent increase in finance approvals in just six months.
First home buyers as a proportion of all buyers also rose to a new high of 27.3 per cent, compared to 26.5 per cent in February and 16.4 per cent in March last year.
Shane Oliver, AMP chief economist told Mortgage Business the extension of the grant was good news for the property market.
“Overall it’s a very pro-housing budget,” he said.
The extension of the grant into the second half of the year should maintain activity but the postponement of the deadline could slow things down he said.
“Some of the first home buyer business may now have been brought forward,” he said.
Mark Lewis of Bernie Lewis Home Loans said first home buyers were certainly propping up the market.
“If you look at the long term average of first home buyers in the market it’s around 15 to 17 per cent. So we’re running around 10 per cent above system - that would be accounting for a fair bit of the increase in activity,” he said.
Mr Lewis said the extension of the grant would be good news for the market but he expressed concern over the impact tighter lending policies would have.
“These [new policies] have really only just started to take full effect. These March figures would encompass loans applied for in January and February when policies were much less stringent. We won’t see just how these lending policies are impacting the market for a couple of months.”
