Over one third of Australia’s property loan borrowers have no idea about the loan process, according to the results of a recent survey conducted by Australia’s leading mortgage broker, the Mortgage Choice franchise.
The annual survey of the financial services franchise nationwide loan consultant network revealed the concern that 34.6 per cent of consumers looking to buy property have no idea about the home loan process, 40.7 per cent have some idea and only 24.7 per cent were considered well-informed. QLD had the most borrowers with no idea, at 41.3 per cent, while Victoria boasted the most well-informed, at 33.8 per cent.
Of further concern is that many borrowers purchase property before organising their loan (18.8 per cent). By arranging a loan pre-approval or applying and being accepted for a loan before searching, borrowers know what property price range they can safely search within. It goes some way to helping borrowers avoid the disappointment of finding a ‘dream’ property then realising they cannot afford it.
Mortgage Choice franchise National Manager Corporate Affairs, Warren O’Rourke said the Mortgage Choice franchise conducts the annual survey of its loan consultants because they are at the ‘coalface’ of the home loan market and therefore able to obtain valuable consumer sentiment on the housing market.
“The results reflect the emerging trends brokers see through daily contact with a vast number, and various demographics, of customers. Collectively, they have their fingers on the pulse of what consumers are thinking and planning when financing their property plans,” he said.
“Conducting this survey forms part of Mortgage Choice’s ongoing strategy to provide clients with the highest possible service standards because when we know what they’re thinking and how they’re feeling we can better attend to their property loan needs.
“The lack of knowledge of Australian borrowers is a case in point of mortgage brokers being a useful resource for information, tips and a broader view of the mortgage maze than just one lender can provide.
“Not only can we provide experienced and professional home loan advice and service but also consumer education material such as the 20-page Step by Step Guide to Property Ownership we created for all our customers, which is available through participating Mortgage Choice franchises”.
The survey also found that, in Mortgage Choice franchise loan consultants’ experience, first homebuyers and owner-occupiers are back in a big way.
A resounding 58 per cent believe first homebuyer borrowing had increased (up from 46.1 per cent last year), 18.3 per cent saw a decrease and the remainder had seen no change. The variation in findings reflects the demand in different areas of the country. The average percentage of first homebuyer customers was 33.3 per cent, an increase on 27.2 per cent in 2005. NSW led the pack, with loan consultants there saying 47.9 per cent of customers were first homebuyers and 76 per cent having noticed an increase.
According to the Mortgage Choice franchise, demand from owner-occupiers was also stronger, with that borrowing group having increased for 64.5 per cent of respondents (38.7 per cent last year) and decreased for a mere 3.3 per cent (33.4 per cent last year). The remainder had seen no change.
Investor borrowing was fairly steady for the majority of consultants Mortgage Choice franchise, having increased for 30.6 per cent and decreased for 39.6 per cent - a great improvement on 63.8 per cent seeing a decrease last year.
WA was truly the stand out state for owner-occupier and investor increases - 82.1 per cent for the former group of borrowers (QLD coming in second at 67.5 per cent) and 69 cent for the latter (SA second at 25 per cent).
The 25-35 years age bracket was still the most popular group of borrowers for 64.8 per cent, an increase on last year’s 62.8 per cent. Second most popular was the 36-45 years age bracket at 31.9 per cent, down from 33.3 per cent. The 46-55 years age group came in third at 1.9 per cent, 18-25s fourth at 0.6 per cent and the 55+ years group was most popular for only one loan consultant.
When it comes to gender and property borrowing, females continue to rule - whether as joint or single applicants. The majority of loan applicants are joint applicants in a relationship, with the female the first point of contact. Coming second were joint applicants with males the first contact, third was single female applicants and fourth was single male applicants. This continues the trend highlighted in last year’s survey.
“The results show that women continue to be financially savvy with initiating the process of borrowing for a property and are confident in making their own enquiries. It also provides further evidence to the belief that, when it comes to the needs of the family, women are generally the primary decision makers in the household,” Mr O’Rourke stated.
Joint borrowers continue to rise with people becoming more comfortable recruiting siblings and friends. For loan consultants seeing an increase in other joint borrower categories (32.4 per cent compared to 36.4 per cent last year), parents and children ranking first, siblings second, friends third, extended family fourth and work colleagues fifth. Siblings and friends jumped ahead of extended family this year.
Borrowers’ preference of loan features remains steady, with interest rates and low fees seen as important above all else.
“Although there is a lack of knowledge upon starting out in the mortgage process, and we’re talking all customers, not just first homebuyers, once they get to the stage of applying for a loan then they have a decent idea of what they’re looking for – low rates and fees,” Mr O’Rourke said.
Loan features borrowers look for were ranked: 1 – interest rate, 2 – low fees, 3 – additional payment options, 4 – redraw, 5 - flexible repayment options, 6 – offset, 7 – product switching capability and 8 – line of credit.
Reverse mortgages are still on the increase, this year for 35.4 per cent (22.9 per cent in 2005). NSW is noticing the increase the most at 58.3 per cent and SA follows fairly closely at 45.5 per cent. The most popular reasons were to take a holiday and renovate current property, according to the Mortgage Choice franchise.
31-Oct-2006