Life & Style

5 Things You Need to Know about Australia’s COVID-19 Housing Market

Modern Australian Home. Photographed by bmphotographer. Image via Shutterstock

Want to purchase your first home or investment property?

Whether you’re looking for your first ‘home sweet home’, looking to break into the housing market or downsize during Australia’s current COVID-19 housing market, we’ve got you covered. We sat down with Aussie home loans’ chief customer officer, David Smith, to demystify five current misconceptions Australians may have with the current COVID-19 housing market.

1. Should I wait until Australia’s property prices fall further?

COVID-19 has struck our economy hard leading some people to believe that the property market will continue to fall which is why many are holding off or staying put.

Although there has been a drop in house prices recently, this figure is smaller than first predicted during the height of the pandemic. So, if you were ready to make your move and aimed to reach your home goal this year, there is no reason why this should stop you if it’s the right time for you.

Finding a home is a personal journey so whether you are buying your first home, wanting to downsize or move suburbs, it’s important to seek expert guidance to help you find the right deal for your circumstances right now. The property market conditions between states and areas differ so seeing a local mortgage broker, like an Aussie broker, can allow you to tap into their local knowledge of the market and their expertise in home loans to discover what options are relevant for you to help you make your property goal a reality.

2. Is it better to wait until Australia’s interest rates drop further?

When it comes to interest rates, predictions vary. Some Australians believe the 0.25% interest rate is here to stay and there is no need to take advantage of it just yet, asking themselves, ‘why now when I can wait?’ While others are waiting for it to drop to a zero rate, and there is even some speculation about a negative interest rate.

Although it is impossible to know for sure when and how interest rates will change, if you are hoping to lock in a good interest rate, the current interest rate is at a historical low which could save you money if you’re looking to buy a home or refinance.

Home loans are generally a long-term financial commitment and differences in the rate that you lock in can stack up over time and with interest rates at record lows, there is only so much to be gained by waiting. So, in saying that, locking in a rate now could be better before they may increase again.

Additionally, some lenders are offering home loans for new customers with interest rates around the 2% mark, which could provide more opportunities for Australians looking to get on the property ladder.

3. Is it harder to get Australian loan approvals during COVID-19?

Getting a home loan approval can be daunting at the best of times, let alone thinking about how the pandemic may be impacting your cash flow and savings balance – especially with many Australians experiencing less financial security.

One thing that is certain is that it takes time for lenders to assess a loan application, so getting pre-approval to find out whether you are eligible and how much you can borrow is a good way to understand where you stand.

On top of that, Australians are wanting guidance when it comes to their property and finances and when it comes to mortgage approvals, an expert can play a valuable role in walking you through your options. Working with a mortgage broker is a good way to understand if you are in a position to get pre-approved for a home loan. Even if your personal circumstances have changed due to COVID-19, a conversation with a broker could help provide you with more clarity to understand your options.

4. Refinancing is hard and not worth it, what if I end up worse off?

For many people refinancing conjures up uncertainties and doubts around how to do it, whether they have enough time or can deal with the hassle at the moment. Maybe you worry that you will end up in a worse position because your financial situation has changed or perhaps starting the process will shine a light on some of the financial details that you would rather not reveal.

Mortgage repayments are often one of the biggest expenses that Australian homeowners pay each month and with financial pressures from COVID-19, you could be feeling under more stress than usual. However, refinancing shouldn’t be a scary word for you as it could help you in a number of ways.

By refinancing you can benefit from a variety of things as it enables you to release equity from your property. Another benefit could be having extra cash on standby, as you could take advantage of the lower interest rates to lower your monthly repayments and save money in the long-term or use it to increase your cash flow by taking advantage of the cashback offers that some lenders are offering their customers.

If you are fortunate to have job security, refinancing could also help you repay your loan faster if you can make additional repayments, which could reduce your repayment term and you could pay less interest. Of course, if you are uncertain about the impact that COVID-19 could have on your home loan then you could consider speaking to an expert, like a mortgage broker before you start the refinancing process, to help you better understand what your options are and find the right deal for you, right now.

5. Do I need to save a huge amount as a deposit?

There are many misconceptions around the figure required for a deposit and how to best save for it. Some people succeed in saving for a deposit over a 12-month period, while for others this seems completely impossible. For some Australians, it can be intimidating and deflating to think about the size of a deposit needed to purchase a home which could be holding them back from taking steps to understand how much they really need to save to hit their home goals.

There are many different variables in buying a home regardless of whether you are a first home buyer, choosing to move or perhaps invest. If you are fortunate enough to have secure financial circumstances or steady employment during this time and don’t know if this is enough to achieve a property goal, seeking guidance to know what your options are will give you an idea on what it will take.

Despite all the obvious information around saving as much as you can, there are different ways to be able to achieve your property goals besides saving 20% of the mortgage amount upfront. There are many government grants and initiatives available to help buyers achieve their property goals. This year, the First Home Loan Deposit Scheme (FHLDS) launched. This initiative enables aspiring homeowners to take out a loan with as little as five percent deposit.

So when it comes to the idea that you need to save a lot of money to even start considering buying a first home, it is worth speaking to a mortgage broker first to discover your options as there may be a quicker and easier solution for you.

For more information visit the Aussie website.


Looking for better ways to save? We’ve found five ways to help Australians cut back on spending. And, if you really want a bang for your buck, check out our food recipes page to help you spend less on takeaway or going out and more time learning a new skill at home!

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