First Home Buyer deposit saving times have plunged

Rising interest rates have created doom and gloom headlines for mortgage holders. But there is some good news. First Home Buyers are now reaching their 20% deposit goal faster.

The 2023 Domain First Home Buyer Report has delivered good news for First Home Buyers.

The report shows that first-home buyers aged between 25 to 34 are hitting their house deposit saving goal more quickly compared to April 2022 – a month before the first of ten consecutive cash rate hikes.

Comparison between states

Sydney experienced the biggest decline – a whopping 17-month drop in average deposit-saving time frames, with it now taking 6 years and 8 months to save a deposit compared to 8 years and 1 month in April 2022.

Brisbane (now an average of 4 years to save a deposit) and Canberra (now 6 years) came in second, both experiencing a 14-month drop.

Melbourne (now 5 years 7 months) and Darwin (3 years 6 months) came next, both with an 11-month decrease in saving periods.

Hobart (5 years 8 months), Perth (3 years 7 months) and Adelaide (4 years 9 months) all saw smaller drops of 5 months, 2 months and 1 month respectively.

Why is it quicker to save a deposit now?

2022 saw a steady decline in national house prices in response to increasing interest rates. In January 2023, CoreLogic reported a record national home value decline of 8.40%.

As property prices fall, so too does the cost of your 20% deposit.

Also contributing to the shorter savings periods is ABS data showing that wages have grown in both public and private sectors, while the unemployment rate is hovering at a low 3.5%. Rate hikes meanwhile have seen savings accounts accrue more interest.

Overcoming potential challenges

Despite the promising new CoreLogic findings, saving a 20% deposit can still be a stretch for many.

The increased cost of living means just paying for essentials takes a big chunk of the paycheck, leaving less for savings.

And with home loan interest rates on the up, borrowing capacity has dropped and mortgage serviceability can be difficult.

Also, CoreLogic has reported that house prices have begun to stabilise.

So, as a first-home buyer, how can you speed up the buying process?

Government incentives can help

Taking advantage of government schemes can speed up your home-buying journey by 4 to 4.5 years, on average.

For example, the First Home Guarantee could see you paying a deposit of just 5% while avoiding an eye-watering lenders’ mortgage insurance fee.

But you’ll have to be quick because spots are limited and can disappear quickly. The next allocation period in July is creeping up, so getting on board with a lending specialist can help you with starting the process or understanding the scheme better.

We’ve got the know-how to get your First Home Guarantee application on track.

We can also see if you’re eligible to maximise your savings by combining other government incentives.

Find out more

If you’re ready to take the plunge and buy your first home we can help get a plan in place to make it happen.

Our lending specialists use a “Get to know you” approach which keeps things simple for you and helps us explore every option. We’ll calculate your borrowing power, assess your deposit options, and help you apply for any government incentives.

In April the Reserve Bank of Australia paused rising interest rates. If this trend continues it may start to kick-start the hosing market. So now may be a good time to explore your options.

We’re here to help

Shopping around for a home loan by sending in multiple loan applications can negatively impact your credit rating?

Speaking to lending specialists like our team can help you avoid these common pitfalls, and others.

We’ll help you find the right loan for the right home.

Our lending specialists offer free advice and are available online, via phone, or in person.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.