Home loan trends to look out for in 2019

Buying a home is one of the biggest purchases any individuals can make in their lifetime. Whether it is buying a first home or an investment property, many find comfort in the idea of a home loan. But what does the current state of Australia’s property landscape mean for home loans in 2019?

Australia’s Property Market

The past 5 years in the Australian property market has seen a huge growth in median property prices, especially in Australia’s capital cities – Sydney and Australia. But recent trends show a trend of steadily growing rate rather than rapid growth.

  • Median house prices are predicted to fall about 7% in mid 2019. (Domain.com.au)
  • Unit prices will continue to grow by 2-3% over 2019 and 2020. (Domain.com.au)
  • Sydney and Melbourne property prices are predicted to stabilise in 2019. (Domain.com.au).
  • Property in Sydney is expected to rise only 3% within the next 3 years. (Propertyupdate.com.au)
  • Over the past 25 years there have been strong housing market conditions, boosting median house values by 412%. (Aussie.com.au)
  • On average, 52% of Australians of their wealth in housing. (Deloitte).
  • The median property price across state capitals dropped 5% in 2018. (Corelogic.com.au)

Current Home Loan Trends

Playing a significant role in the Australian economy, changes in the property market continue to impact Australians and the manner in which home loans are conducted.

  • NSW has the highest average loan of any state, at $456,000. (Finder.com.au)
  • Valued at $7.5 trillion, housing plays a vital role in the Australian economy. (Deloitte)
  • The average loan size in Australia during 2018 was $379,300. (Finder.com.au)
  • According to Digital Finance Analytics, 40% of home loans were rejected in December 2018. (Digital Finance Analytics).
  • The highest rate of mortgage rejection was for refinance applications at 48%. (Digital Finance Analytics).
  • The number of refinancing commitments for owner occupied housing (trend) fell 0.1% in November 2018. (ABS).
  • Authorised deposit-taking institutions rejected over 40% of home loan applications, compared to the 20% rejection rate by non-banks. (Digital Finance Analytics).

Home Loan Predictions for 2019

Stability in the Australian housing market is predicted for 2019. However, due to stricter mortgage lending standards in 2019, home loans will continue to be difficult to obtain.

  • The number of homes for sale is expected to rise in 2019. (Nerd Wallet)
  • Mortgage rates are expected to rise again in 2019, but at a slower rate than in 2018. (Nerd Wallet).
  • A 0.4% rise in the 30-year fixed mortgage rate is expected. (National Association of Realtors).
  • Home approval rates could drop to as low as 20% in 2019 due to tightening of credit conditions. (David Plank, ANZ Senior Economist).
  • Due to home loan sizes falling, this is an indication of falling house prices. (David Gradwell, ANZ).

The impact of Home Loans

Home Loans require a significant investment and commitment and can have serious impacts on your finances. As the housing market continues to change and grow, there is a greater need to understand the impact of taking out a home loans.

  • 61% of individuals renegotiate their home loans at least once every 5 years. (KPMG International).
  • In 2016, the average household debt was 4 times what it was 27 years ago. (KPMG International).
  • The ABS saw dwelling approvals decline by 9.4% from August 2018. (ABS).
  • The value of home loans in Australia continued to decline in September as credit growth slows. (Business Insider)
  • Loans to owner-occupiers have fallen by 11.1%. (Business Insider)

Choosing the Right Home Loan / The Costs of a Poor Home Loan

The costs of choosing the wrong home loan can be detrimental. Factors that need to be considered when choosing a home loan include, economic factors, personal financial circumstances and future plans.

  • Tighter lending conditions have been a major contributor to Australian property prices. (Domain).
  • Between October and November 2018, the average loan size for first time home buyers fell by $2,400. (ABS).
  • Population growth, low employment and low interest rates will underpin Australian property price growth in the medium term. (Domain).
  • The total value of dwelling commitments excluding alterations and additions fell 1.1% in November 2018. (ABS).
  • In 2018, the average home loan was $345,800, dropping compared to 2017 where the average home loan was $374,050. (Finder).
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