first homebuyers blow budget
Interstate buyers are slowing down – Source: Canva
  • Prospective buyers struggle to afford homes
  • Saving for deposit increasingly difficult
  • Alternative pathways to homeownership explored

The record surge in home prices over the past few years is leading to increasing numbers of home buyers losing hope that they can ever afford a property of their own.

Helia’s latest pulse survey has found that as more prospective home buyers struggle to buy, there is a perceptible shift to more first-time buyers considering a purchase that may not be their ideal property or exploring alternative pathways to home ownership.

According to the survey, saving for a deposit remains a major challenge, with 90% of prospective first home buyers confirming it is increasingly difficult to save for a deposit amid rising living costs.

Home buyers are using Lenders Mortgage Insurance (LMI) and other alternative strategies to help them get onto the property ladder, according to Helia.

Helia Chief Executive Officer, Pauline Blight-Johnston said: “Over 90% of first home buyers reported that saving for a deposit is feeling increasingly out of reach.”

Fixed versus variable

As first-time buyers navigate the current economic climate, the survey found that when purchasing their property, 41% of home buyers had opted for a home loan with a fixed rate period, with the remainder on variable rate loans.

Although many fixed-rate borrowers have been insulated from recent interest rate increases, 53% will have their fixed rate period expire in the next 12 months, with 27% expiring in less than 6 months, and 26% within 6 to 12 months.

For people surveyed with fixed-rate home loans expiring in the next 12 months, 64% said they are likely to refinance.

Mortgage stress

The survey also found that mortgage holders are being challenged in the current economic environment, with over 33% of recent home buyers finding it difficult to meet their current mortgage repayments.

While 53% responded that they would have difficulty ahead, should interest rates increase by 1%, it would be putting additional strain on household budgets.

LMI on the rise

The survey found that more home buyers are turning to LMI to fast-track their journey into home ownership, with awareness and use of LMI strong.

Blight-Johnston said the survey showed 27% of recent home buyers used LMI to get into their first property.

“We know first-time buyers are motivated by the long-term financial benefits of home ownership and are keen to step out of the rental cycle and avoid rising rental costs. As they continue to explore their options, we remain committed to developing more solutions for home buyers.”

The survey also found that alternative pathways are also poised to grow, with 39% of first-time buyers likely to consider co-ownership with family or friends.

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