3 silver linings in the 2023 property market
First home buyer? There could be silver linings in the current property market that could benefit you.
Sponsored by QBE – helping customers learn more about lenders mortgage insurance (LMI). Learn more on Finder's LMI hub, brought to you by QBE Insurance. Providing LMI since 1965.
High interest rates and falling property prices in major cities have been the norm for almost a year now. Understandably, it's made both buyers and sellers nervous.
Let's take a look at some potential silver linings in the current market.
1. Tools like LMI can enable home ownership
Although house prices have dipped (more on that in a moment), it doesn't mean they're cheap. And saving a 20% deposit is a massive deal.
The good news is that there are tools out there to help people buy their first home sooner.
Lenders mortgage insurance (LMI) is an insurance product for the lender. However, it can help home buyers enter the property market sooner by not having to save a 20% deposit.
While LMI can cost thousands of dollars, it provides an opportunity for the buyer to enter the market sooner.
It also doesn't need to be paid upfront. Many lenders can incorporate it into the loan itself.
Our LMI calculator can help indicate the type of cost that may be added to your loan. This is an estimate only.
It also doesn't have to affect your lender choice, either. QBE has a relationship with a variety of lending partners.
This means that you should still be able to select a home loan that has the features you want and get onto the property ladder sooner.
How borrowers can get a better deal on their first home
SPONSORED: Buying your first home this year? Make sure you choose the right loan.
Read more…2. Lower house prices
Since May 2022, housing prices have been consistently dipping.
They might not be quite where first home buyers would like them, but the benefit is that you probably won't need to borrow quite as much for a mortgage.
Reduced house prices can also translate to reduced stamp duty costs. This is good news for anyone looking to save cash in the short term and reduce the admin expenses that can come with buying a home.
Now, it's important to remember that higher interest rates will likely result in higher repayments and a reduced borrowing capacity.
But if you're in a position to make repayments – and able to factor in potential future interest rate rises too – then 2023 may be your year to find your first home.
3. Better options for saving a deposit
In spite of the potential for a more favourable purchasing environment, there's actually been a downturn in borrowing among Australians over the last year or so.
This isn't totally surprising.
There have been numerous rises to the cash rate by the Reserve Bank of Australia (RBA). That means mortgage repayments around the country have also seen a jump.
But rising interest rates can still yield a range of benefits for future borrowers.
If you're looking to build up your savings this year before you apply for a home loan, interest rates for saving accounts are some of the most favourable that they've been in years.
High interest savings accounts and term deposits – among other options – can be effective for building up your bank account before you take the plunge.
After all, the more you save now, the less you'll likely have to borrow in the future.
Of course, it's still important to weigh the potential benefits against the risks.
Everyone's situation is different. Whether you choose to purchase this year or save for a future deposit, the decision should be based on your individual circumstances.
If you're unsure about the best course of action, it may be worth speaking with a financial professional.
Visit the QBE LMI hub to learn more about LMI today.
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