Property buying rises 17.1 per cent on back of low interest rates and first home owner's grants.
The current environment of low interest rates, coupled with generous state and federal government first home buyer's grants, has sparked a wave of property buying according to recent ABS figures.
On seasonally adjusted figures, the graph shows that total dwellings purchased or constructed (excluding refinances) rose in January to 38,832 up 17.1 per cent from the 8 year low of 33,166 witnessed in August 2008. In contrast, the number of refinances of established dwellings has fallen by 21.1 per cent since the high of 21,321 in January 2008.
"At Rate Detective we have seen a big drop in the number of people seeking refinances and are large spike in first home buyer's seeking new finance", Rate Detective Co-Founder, Mr Damon Rasheed said today.
"There is no doubt that the big increase in new finance requests is due to the generous first home buyer grants on offer as well as the current environment of low interest rates with some lenders offering a standard variable rate as low as 4.69%. We have seen a wave of potential first home buyers showing renewed enthusiasm in the market because of these Government and RBA initiatives. For new buyers, the market is looking attractive.
Home owners that elected to fix their interest rates last year, when rates were high, are doing it toughest. In many cases it's difficult to refinance these loans in the short run due to the associated breakout costs that these loans incur. This is why we have seen a drop off in the number of refinances in the market over the past 6 months. If you did choose to fix your loan during this time, it still pays to talk to a mortgage broker who can investigate your savings from refinancing verses breakout costs" Mr Rasheed said.
Despite signs that the market is beginning to pick up, the demand for housing is still down 18.8 per cent from the highs we saw in June of 2007.