Real estate Australia: Homeseekers warned over small buying window, top home loan deals for refinancing

Amid skyrocketing inflation and interest rates, saving money on your mortgage can be one of the best ways to get ahead of the cost of living crunch. Here’s how.

It’s a buyer’s market but home seekers have been warned they may only have a small window to purchase properties at lower prices before they rise again.

Housing experts revealed many property markets were on track to rebound in the months ahead following record price falls over the past year.

The main drivers of the uplift in prices over the second half of the year were worsening housing shortages, rampant migration and runaway rental increases coaxing more first homebuyers to purchase.

Agents reported buyers had also adjusted to the initial shock of the Reserve Bank’s recent barrage of rate rises and were factoring future rises into their spending budgets.

My Housing Market economist Andrew Wilson said the market was already improving and looked likely to bottom out by June.

Ray White chief economist Nerida Conisbee said there was mounting evidence the worst of the year-long housing slump had passed and prices in some cities were closer to static than falling.

First homebuyers Sam Nielsen-Tuck and Christie-Anne St Guillaume recently bought their first home. Pictured with daughter Amelie age 1. Picture: Wayne Taylor

Prices nationally inched down by just 0.09 per cent over January and by a similar margin over December – a far cry from the more than 1 per cent drops over the months following the first rate hikes in May.

Ms Conisbee said rate rises had pushed down prices but their impact on future price movements had been overblown.

“It’s a big influence on the market, but it’s not the only factor,” she said. “Little housing stock is coming onto the market in most areas and this doesn’t look like it will change. In fact, it could get worse because we’re not building enough new homes and builders are going bust.”

Property figures showed current listings across the country are about 30 per cent below the five-year average. Three- and four-bedroom houses were in particularly short supply.

“The quality homes are rarely listed. Buyers who want them have to compete and prices for those houses will go up,” Real Estate Buyer’s Agents Association of Australia president Cate Bakos said.

“There are a lot of people who can buy, but aren’t doing so,” Ms Bakos said.

“They’re all for the bell to ring saying it’s the bottom of the market. Those buyers will be your competition when the market recovers. The exact same thing happened during pandemic. People held off until the market started booming, then it was too late.”

Buyer’s agent Rich Harvey of Property Buyer said sitting on the sidelines waiting for further falls in property prices before making a purchase wasn’t a smart strategy given how rapidly rents were rising.

A typical capital city tenant is currently spending about $30,000 a year in rent and some renters would not necessarily get this kind of saving on their purchase price if they kept waiting to buy.

“The biggest falls have already happened, any additional falls will be a lot smaller, but during all that time you’re paying a lot in rent that could have paid off your mortgage,” Mr Harvey said.

First homebuyers Sam Nielsen-Tuck and Christie-Anne St Guillaume said they debated whether to wait for prices to fall further, but realised taking this path didn’t stack up.

“Our rent wasn’t cheap and we knew it would keep going up if we waited,” Ms St Guillaume said, adding that they decided to buy a house in the Melbourne suburb of Clyde.

“We didn’t think prices were going to come down all that much for the kind of houses we wanted. We thought, if we wait too long we will miss the chance to pay off more of our loan.”

HOW TO SAVE ON YOUR MORTGAGE

l Look for a cheaper rate. The less interest, the more you save. Even just a small difference in rates can save you hundreds of dollars a year in repayments.

l Make sure the loan meets your needs. A low rate is important, but the loan must also have the features you need. If you need an offset account, avoid a basic loan without one. A package loan might look attractive, but it might have high annual fees. If you don’t take advantage of the other products in the package, it could be a waste of money.

l Avoid loans with high fees. Most new loans have fees, but the costs vary from practically nothing to hundreds of dollars. It’s worth keeping loan fees in mind when preparing to refinance your home loan.

l Talk to your current lender too. Sometimes you can get a cheaper deal simply by calling them. Many lenders offer new, better deals for new customers while keeping existing borrowers on higher rates. Sometimes all it takes is a phone call.

TOP DEALS FOR REFINANCING

All lenders

l Unloan Variable Home Loan: 4.44% (comparison rate 4.35%). Requires 20% deposit.

l Tic: Toc Live in Loan Variable Rate: 4.56% (comparison rate 4.57%). Requires 10% deposit

l UBank Neat Variable Home loan: 4.99% (comparison rate 5.01%). Eligible borrowers can get a cashback of $4000-$5,000 depending on loan size. Requires 40% deposit.

l Adelaide Bank Smart Saver: 4.63% (comparison rate 4.64%)

Big four

l Commonwealth Bank Extra Package: 5.17% (comparison rate 5.56%), $2000 refinance cashback

l Westpac Flexi First Option: 4.74% (comparison rate 5.07%), up to $3500 cashback

l ANZ Simplicity Plus: 4.94% (comparison rate 4.95%), up to $4,000 cashback

> NAB Base Variable Rate Home Loan: 5.24% (comparison rate 5.28%), $2,000 cashback for refinancers

Source: Finder.com.au

TIPS FOR HOME BUYERS WANTING A LOWER PRICE

> Do you research: come armed with comparable sales data and show it to agents to justify your offers.

> Have a plan B: don’t be overly committed or emotional about only one house. It will weaken your negotiating. Talk up your other options with the agent.

> Don’t avoid auctions: sales by auction can be more stressful, but they are also more transparent as all the buyer offers are out in the open.

> Find out why the owner is selling: Divorce and debt may prompt the vendor to accept a lower price if they can get a quick sale.

> Make sure you have pre-approval for a loan so you know exactly how much you can spend

Originally published as Real estate Australia: Homeseekers warned over small buying window, top home loan deals for refinancing