New research announced today by specialist lender, RAMS Home Loans suggests that the vast majority of people looking to buy their first home would still be in the market regardless of the First Home Owners Grant (FHOG) Boost even if interest rates were higher than at present.

According to RAMS First Home Buyers’ Pulse Check, less that 40% of people looking to buy their first home in the next 12 months are trying to secure a property before the Home Owners Grant Boost ends on 31 December 2009. What’s more, only one in five (21%) suggested their search for a first home was reliant on interest rates remaining at the low levels we have had since February.

RAMS Head of Brand and Marketing, Lynne Wyatt was encouraged by the findings. “Earlier this year we saw an unprecedented number of first home buyers entering the market. At RAMS the number of first home buyers settling loans peaked in May. Since then we have seen their numbers return to a more sustainable level as the pent up demand of the last few years has been satisfied.
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The federal government has no intention of ending early its more generous first home-owners grant despite signs a housing price bubble may be developing.

The governor of the Reserve Bank, Glenn Stevens, last week warned that low interest rates could fuel a house price bubble if supply failed to improve.

His warning was backed up by a private survey that showed residential property prices experienced the biggest quarterly growth since the pre-crisis days of late 2007.

The residential construction sector reported two-year high activity with official data showing building approvals surged by 9.3 per cent in June, marking the biggest monthly increase since May 2005.
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Most Australians believe the boosted First Home Owners Grant contributed to inflated property prices, a national survey has found.

An online poll conducted by leading mortgage broker Loan Market Group found 66 per cent of respondents thought the expanded grant scheme had pushed prices up in some markets.

But 35 per cent of those who said the grant had inflated prices believed it had only impacted on the lower end of the property market and 31 per cent said it had not stopped them from buying real estate.
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The federal government’s six-month extension of the first home owner grant (FHOG) boost has been criticised for being too short and announced too late.

The boosts, which gives first home buyers an extra $7,000 when purchasing an established home and an extra $14,000 for new homes, were due to end on June 30.

The federal government said in its 2009/10 budget on Tuesday the initiative will be extended for six months.

The full boost will continue homes purchased on or before September 30 this year.
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Australia’s largest independent mortgage broker Loan Market Group has applauded the decision in tonight’s Federal Budget to extend the boosted First Home Buyers Grant for another six months.

Loan Market Group Executive Director John Kolenda said the decision to extend the expanded grant scheme would provide some certainty for first time buyers, the residential real estate sector and the housing industry.

Mr Kolenda said doubling the First Home Buyers Grant to $14,000 for established homes and $21,000 for newly built properties last October had helped underpin the residential property market during the global economic crisis.
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A national affordable housing organisation has called on the federal government to scrap its first home owner grant.

The grant, which was raised from $7,000 to $14,000 for existing dwellings and from $14,000 to $21,000 for new homes as part of Labor’s $10.4 billion stimulus package last year, is due to expire on June 30.

The National Shelter has called on Treasurer Wayne Swan to axe the scheme when he hands down his second budget on Tuesday, saying it inflates housing prices beyond the value of the grant.

“We’d be in favour of getting rid of all of it,” chief executive Adrian Pisarski told ABC Radio on Monday, adding if the scheme was continued, it should be means-tested.
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“Don’t get burnt if rates rise and house prices fall” says leading online lender

Despite interest rates being at an all time low, Australia’s leading online lender www.MyRate.com.au is warning first home buyers not to bite off more than they can chew because the current attractive environment will not last forever.

“There appears to be a rush by first home buyers to purchase their dream home before the boost to the grant expires on June 30,” commented Kevin Sherman, Managing Director of www.MyRate.com.au.
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The increase in the first home buyers grant is helping its intended beneficiaries - builders.

It may come as a surprise to first home buyers that the government’s decision to double the grant to $14,000, or triple it to $21,000 for buyers of new homes, was not aimed at helping them.

In fact, the latest figures from the Australian Bureau of Statistics (ABS) showed the average loan taken out by first-time home owners had risen to $280,600 by February this year.

That was an increase of $19,700 from September last year, the month before the boost to the grant was announced, enough to eat up the whole of the grant or more.
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First Home Owner Boost expires in two months.

Potential first homebuyers need to be aware that the Federal Government’s First Home Owner Boost deadline is fast approaching. In order to take advantage of the offer, first homebuyers must have entered into a property purchase contract by 30 June 2009, or they will miss out on the $7,000 boost to the First Home Owner Grant for established homes and the additional $14,000 for new homes.

This upcoming deadline is one of the key factors behind the obvious sense of urgency surrounding recent first-home purchases.
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Mortgage broker Loan Market Group has warned the Australian residential property sector faces a major setback if the Federal Government ends the boosted First Home Owners Grant.

Prime Minister Kevin Rudd today indicated the expanded scheme would end as scheduled on June 30 despite widespread calls for it to be extended.

Loan Market Group Executive Director John Kolenda said the decision last October to increase the grant had resulted in the real estate market being one of the few parts of the national economy that was still active.
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An end to the federal government’s more generous first home owners grant would be a setback for the recovery in the housing market, a mortgage broker says.

The grant was raised from $7,000 to $14,000 for existing dwellings and from $14,000 to $21,000 for new homes as part of the government’s $10.4 billion stimulus package last year.

The increase is due to expire on June 30.
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Today’s Guest Post comes from Paul Lahiff

One of the few positive developments in the Australian economy of more recent times has been the stimulus created by the boost to the First Home Owners Grant, which the Rudd government announced in October last year.

The number of first home buyers is up 54% over the last three months, and some 61% since August last year according to the Australian Bureau of Statistics.

The boost to the First Home Owners Grant - an increase from $7,000 to $14,000 for established dwellings and to $21,000 for newly constructed dwellings, with an end date of 30 June 2009 - combined with lower interest rates, an undersupply of properties for sale, and an improvement in housing affordability, have created the catalyst for many potential first home buyers to take the plunge.
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Sales of new homes rose for a second straight month in February as lower interest rates and government grants enticed buyers, a survey shows.

The Housing Industry Association (HIA) said new home sales rose by 3.9 per cent in February, led by a 4.7 per cent increase in the purchases of detached homes.

HIA chief economist Harley Dale said the project home building market received a boost from low interest rates and the first home owners grant (FHOG).
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The federal government won’t make a budget promise to extend the life of increases to first home owners’ grants, even though there is evidence it has been a success.

Addressing the National Press Club, Finance Minister Lindsay Tanner said he expected the budget would be “very tough” to put together, but doubted the government’s forecast for a seven per cent jobless rate by mid-June next year would need to be revised up.

Official labour force data will be released on Thursday, which economists expect will show the unemployment rate jumping in February to 5.0 per cent for the first time in nearly three years.
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Increases in first home owners grants and falling interest rates have led to the highest number of first home buyers purchasing homes in NSW in two decades, the state’s Premier Nathan Rees says.

In October the federal government lifted the first home owners grant from $7,000 to $14,000 for established homes and to $21,000 for newly-constructed houses.

In the November mini-budget, an additional $3,000 was made available to NSW first home buyers.
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