First home buyers are facing price, repayment headwind

Getting a foot on the home ownership ladder is increasingly challenging, with Canstar calculations finding that the average home loan repayment for first homebuyers has increased by 171% over the past twenty years – compared to RBA-advised inflation over the timeframe of just under 70%. That increase in loan repayment is despite Australia?s currently-low home loan interest rates.

According to the most recent data from the Australian Bureau of Statistics (ABS), the average home loan commitment for first homebuyers in April 2014 was just over $300,000 – or $300,900 to be precise. That?s up from approximately $86,000 in April 1994. Correspondingly, average home loan repayments are also up, with the average repayment on a 25-year home loan now costing $1,922 per month.

The good news? Well, first homebuyers should be relieved that loan interest rates are at historic lows – if they were paying the average home loan rate from April 1994, their current monthly repayments would be $2,474. Interest rate fluctuation is something to keep in mind when assessing your ability to repay…

	Loan size	Repayment
April 1994	$86,200	$708
April 2014	$300,900	$1,922
Loan size growth	$214,700
Difference in loan repayment		$1,214

Source: www.canstar.com.au and www.abs.gov.au. Based on loan taken over 25 years taking into account the average of the four major banks standard variable interest rates.

First homebuyers should actively negotiate

Ready to take the home-ownership plunge? Make sure you actively negotiate a good-value loan – here are some tips on how to go about it. Cutting the cost of your home loan can potentially save you tens of thousands of dollars over the life of that loan. Click here to research your home loan options.