The proportion of mortgages taken out by first time buyers has dropped steadily since the First Home Owners Grant (FHOG) was wound down late last year.
Figures released by the Australian Bureau of Statistics show that first home buyers account for ten percent less of the property market than they did in early 2008. First home buyers comprised up to 30 percent of the market when the full grant was available.
The FHOG has been scaled back from its peak of $14,000 plus additional benefits depending on which state the property buyer was located. The nationally funded top-up is no longer active and was widely believed to have boosted the first time buyer market when it was introduced.
Three successive rate rises in recent months has also dampened the spirits of people hoping to get a foot on the property ladder. The rate rises have coincided with unfavourable changes to the loan to value ratios of several major lenders. Combined with a decrease in the FHOG, first time buyers are now having a tough time being able to afford a mortgage.
Mortgage Brokers are coping with the changes to the market as an increase in refinancing and investment activity has buoyed the home loan market. Lenders have recently made it easier for existing home owners and investors with large deposits to obtain a mortgage.
Second tier lenders are also returning to the market and reporting substantial profits. Despite the bad news for first time buyers, the overall mortgage market appears to be recovering well from the recession and returning to prosperity.
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