Oz homes grants rising

Australian first-time home buyers are rushing to take advantage of a one-off boost in the Federal Government's housing grant before it ends in three months time, the nation's largest mortgage broker says...

Australian Finance Group (AFG) says the number of loans arranged by the firm rose by 36.8 per cent in February to 7,673 loans, valued at £1.23 billion.

Of those more than a quarter, or 26.1 per cent, were taken out by first home buyers, up from 25.8 per cent in January.

That compared to February 2008, when the number of loans AFG sold totalled 7,574, with only 11.5 per cent going to first home buyers.

However, AFG General Manager of Sales and Operations Mark Hewitt warned that if the Government grant top-up was not extended, the market may be looking over cliff by the June 30th deadline.

"The dramatic increase we've seen in first home buyers over the past four months is a double edged sword," he said.

"It's positive in that it underpins the future recovery of mid-level property markets by getting significant numbers of people onto the property ladder.

"But we're concerned that if the Government doesn't announce an extension to the grants fairly soon, we'll continue to pull demand forward, and will be left staring over a cliff come the end of June."

In mid-October, the federal Government doubled the first home owners grant to £6,470 for established dwellings and tripled it to £9,705 for newly built properties.

AFG's figures released on Tuesday also showed NSW had the highest concentration of first home buyers, at 34.5 per cent, in February, followed by Victoria on 26.8 per cent.

Borrowers also continued to shun fixed-rate loans, with the number of new fixed mortgages falling to 2.5 per cent in February, after peaking at 27.3 per cent in November 2007.

Standard variable rates were the mostly popular, making up 48.8 per cent of loans.

Source: www.theage.com.au