From January 1, 2012, New South Wales first home buyers will only be eligible for a stamp duty exemption on
newly built and “off the plan” homes.

These changes will significantly disadvantage a large majority of first home buyers, as over 80% of homes bought in NSW are existing properties.

Consequently, NSW first home buyers will need 3% to 4% more when purchasing an existing property.

They may also find it harder to save for a deposit, resulting in a greater reliance on 95% LVR loans.

Additionally, guarantor loans are expected to become the main method used by NSW first home buyers as they allow you to borrow the full cost of the home, as well as stamp duty.

As the deadline gets closer there is a strong chance that the prices of houses will rise, so it would be best for NSW First Home Buyers to act quickly and buy as soon as possible.

If you are a NSW first home buyer try to purchase a property before the end of the 2011 year.

If you are a NSW first home buyer and were to purchase a property before January 1 2012 with a value of $500,000 you would save $17,990 !

Did you know that there are some lenders that can lend 95% of a properties value as well as a credit card of up to $20k at home loan rates? Borrowers must have 5% in genuine savings to qualify, however the banks can now effectively lend funds to cover the stamp duty.

For more information, please see our First Home Owners Grant guide.

Below is the article from News.com.au.

“In a major blow to those looking to get on the property ladder, the NSW Government has scrapped stamp duty concessions for 80 per cent of first-home buyers.

From January 1 next year, newcomers to the property market will no longer be able to avoid having to pay transfer title charges on existing homes under $600,000.

Stamp duty exemptions will now be restricted to newly built and “off the plan” properties only.

The NSW Budget: Dissected and in detail

The housing industry reacted angrily to a hike in stamp duties.

Real Estate Institute of NSW president Wayne Stewart said: “Australia weathered the last global financial crisis because the property market was invigorated. Yet those lessons have been ignored today.”

And he warned that a rush to beat the deadline would push up prices of existing homes.

“It is inevitable that, as first home buyers scramble to beat the January 1 deadline, we will see prices increase as demand exceeds supply,” he said.

“Unfortunately for some, the dream of home ownership will now become simply unachievable.”

Martin Real Estate managing director Jeremy Martin added: “Between now and January rivers of gold will flow but after the party there will be a hangover.”

The vast majority of first home buys in NSW – 42,000 out of 50,000 – being made on existing homes.

NSW is now one of the few states not to have a stamp duty concession for first home buyers purchasing existing homes.

However, construction and property groups welcomed the change and said the concession simply pushed up house prices.

“This reform will make housing more affordable for first-home buyers by boosting the new housing supply,” said Aaron Gadiel from the Urban Taskforce, a large developers’ lobby.

“Newly built housing will now be more competitive relative to existing housing. It should have been that way all along.”

He said the threshold for receiving the benefit, which tails off between $500,000 and $600,000, should be increased. “A first-home buyer with children looking to buy a three-bedroom apartment in Sydney will struggle to find one less than $600,000,” he said.

The Property Council of Australia said tying stamp duty concessions to new housing supply was “a smart choice”.

“Housing supply remains limp across NSW and gearing incentives to motivate the construction of new stock makes sense,” executive director Glenn Byres said.”

Source: News.com.au 07/09/11

A major mortgage insurer, Genworth, have recently suggested a mandatory mortgage fact sheet for home buyers.

This is a great idea for borrowers to be educated about LMI (Lenders Mortgage Insurance) as many do not know what it is or if it would apply to their loan.  It does not protect them as a borrower, yet many borrowers believe that it does.

The key to this fact sheet is that it must be kept simple as the usage of LMI varies between different lenders and insurers, it should inform customers without confusing them.

One thing the fact sheet could mention is that some lenders have significantly cheaper LMI than others, however this fact is unlikely to be supported by the banks.

To many LMI is seen to be an unnecessary cost, but for those Australians who find it difficult to save enough for a deposit LMI can help them having a chance to taking ownership of a home.

A general rule is that LMI is applied to loans above 80% of the property value with a normal home loan, and above 60% of the property value with a low doc loan.

You can learn more on our Lenders Mortgage Insurance page or get an LMI quote using our calculator.

Below is the article from Australian Broker News.

“Mortgage insurer Genworth said a new mandatory one-page mortgage fact sheet for home buyers that will contain details on Lenders Mortgage Insurance will enable them to better compare “apples with apples”.

Announced on the weekend as part of the Federal Government’s bank competition reform package, the new fact LMI sheet will allow consumers to compare quotes side-by-side, including the difference in premiums and rebate schedules.

Treasury has advised against the introduction of a scheme to allow the transfer of LMI between lenders, citing the expense, the extreme complexity of administration, and the conclusion it would benefit only 1% of all borrowers.

Genworth said in a statement the mandatory fact sheet could be similar to the Government’s Key Fact Sheet for home loans, and could be handed out by lenders just prior to borrowers signing their home loan contract.

The insurer said it would benefit borrowers to be aware of the reason for lenders requiring LMI, how LMI reduces the interest rate borrowers with a smaller deposits have to pay, the frequent capitalisation of LMI into the loan, and the availability and structure of refunds.

“Genworth believes it is important that homebuyers know how Lenders Mortgage Insurance works and the benefits it offers, plus their potential rights in relation to existing refund schedules if they switch home loans,” Genworth CEO Ellie Comerford said.”

Source Australian Broker News 22/08/11

Westpac have today announced that First Home Buyers are in fact lower risk borrowers than many other types of borrowers such as investors, second home buyers or empty nesters. This is somewhat counter-intuitive, surely people who have not borrowed before and have a lower asset position would be a higher risk?

In this case the statistics don’t lie. We regularly hear from the other banks such as CBA and St George that they find a lower rate of arrears in their first home buyer loan book. The reasons for this are simple:

• First home buyers are quick to get another job if they lose theirs.
• Most first home buyers cannot get approval if they do not have genuine savings, whereas second home buyers and investors often have this requirement waived as they have equity.
• Their loan sizes tend to be smaller and their properties tend to be more affordable, so in the event of financial hardship they have more options available to help them get back on track.

Below is the article from Australian Broker News.

“First home buyers, though typically more leveraged than other market segments, show the best arrears performance, Westpac has indicated.

In its third quarter results announcement, Westpac CEO Gail Kelly said that the bank’s first home owner portfolio saw its best performance and lowest level of delinquencies. The bank’s general manager of mortgage broker distribution Huw Bough told Australian BrokerNews this could be due to first home buyers becoming savvier about the terms and details of home loans.

“We know that first home buyers have more access to financial education, seminars, internet online tools, and social media specifically targeted at them. This could mean they are most likely to understand the details of their home loan under the current economic environment where there is a focus to pay down debt and save more,” Bough commented.

In announcing its results, the bank indicated it had seen subdued mortgage growth, growing its portfolio just above system. While demand for credit was slow, Bough commented that brokers continue to introduce more than 40% of the bank’s mortgage business. He said the bank would drive the channel’s growth through building relationships between brokers and local branch staff.

“We are doing this by introducing brokers to our bank managers and their teams locally to build strengthened partnerships that will benefit the customer,” he said.”

- Source Australian Broker News 18/08/2011