One more lift for mortgage funders

Home loan funders, and especially major banks, received a further boost to demand from the Australian government's 2009/10 budget, published last night. The government decided to extend the "boost" to the established first home owners grant by three months to September 2009 and to continue the additional grant, at 50 per cent of the prior level, for another three months beyond that.

The additional grant is $7000 for established homes and $14,000 for new homes on top of the long-running grant of $7000.

While many lenders no longer count the government grant as a genuine deposit, and mortgage insurance is also becoming harder to access, prospective home owners see the grant as worth grabbing hold of.

Expectations that the elevated grant would run out, as planned, at the end of June contributed to a surge in demand for new loans recently. Monthly data for March 2009 published by the Australian Bureau of Statistics showed that first home buyers accounted for 27 per cent of new home loans, up 10 percentage points from March 2008.

The ABS data shows that banks (including small banks but excluding credit unions and non-bank lenders) accounted for 92 per cent of all new home loan business in March.