Is it a good time to take out your first home loan?

It’s a bustling, busy world and sometimes we all need to take a breather and figures out what’s really important. If you’re looking for a way to create a sound future for your family, home ownership could be for you. There are, of course, a few other points to this decision – the big one being your mortgage and figuring out how much you can afford to borrow.

But how can you figure out whether it’s a good time to take out your first home loan?

House prices

The papers are bursting at the seams with claims of skyrocketing house prices, but are things as unattainable as they’ve been made out to be? According to CoreLogic RP Data, value growth isn’t nearly as rapid as it has been in the past. The last housing boom of 2001-2004 saw staggering price increases, but this hasn’t been reflected more recently.

Take Sydney, for example. It’s no secret that the Harbour City is a property hotspot, but CoreLogic figures show that current growth doesn’t come near the level experience more than a decade ago. While values have bloomed 38.8 per cent between 2012-2014, they grew an enormous 60.2 per cent between 2001 and 2004.

What’s more, prices have slowed by 0.9 per cent during May across the combined capital cities according to further CoreLogic research, which is the first drop since November last year. This could give you a great opportunity to get a foot in the door and secure your first home loan.

Interest rates

Even if property prices accelerate once more, low interest rates are like a big, blinking sign for borrowers. After all, there’s nothing more attractive that having less to pay on your mortgage! Luckily, things could be working in your favour at the moment. The official cash rate has been on a steady slide since 2011 and lenders have followed suit, trimming their interest rates down considerably.

In fact, the Australian Bankers’ Association (ABA) has found that the average advertised standard variable home loan rate was 5.45 per cent in May 2015. This makes housing finance remarkably cheap and given that the Reserve Bank of Australia made the landmark decision to cut the rate by 25 basis points in that same month, there could be further falls to come.

So you’re paying less in interest – what does this mean for your finances? The ABA points out that households are borrowing more for property purchases, but are in a better position to take on this kind of debt. Declining interest rates mean you could have the chance to get ahead on your repayments and create a buffer, which allows some breathing room in case something unexpected comes up.

Applying for a home loan isn’t a decision to take lightly, but with help from your mortgage broker and the right conditions, your home ownership dream might be closer than you realise.