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MFAA Prosper : Mortgage and Finance Brief 10
Stay at home and save Australian potential first-home buyers (FHB) think now is a not good time to buy, a new international mortgage trends report from Genworth has revealed. The report, which is based on data from over 9000 current and aspiring home buyers from Australia, Canada, India, Ireland, Italy, Mexico, the UK and the US, compares borrowers' attitudes in those countries towards finances and the mortgage market. "The Australian market, like the Indian and Canadian markets, is characterised by rapid property price rises in recent years, deterring potential FHBs, and explaining why potential Australian FHBs surveyed don't think now is a good time to buy, even though they desire to," says Genworth Australia CEO Ellie Comerford. And it found that one in five Australians, as well as their US and Canadian peers, were prevented from entering the property market due to debt. Thirty-nine per cent of Australians surveyed used over half their income to service debt, while 45% have made overpayments on their mortgage in the past year -- the second-highest proportion of any country surveyed. "Whether for financial or cultural reasons, Australians are the most relaxed about being highly leveraged, with one in three comfortable borrowing more than 80% of their home's value: the highest proportion of the eight countries surveyed," says Comerford. Good time to buy? ASIC punishes brokers ASIC has banned a Victorian finance broker for life after being found guilty of fraud. Clearwater Financial Systems director Kristy Ann Lake was found guilty of obtaining property by deception, after falsely using another person's name when submitting loan applications. Meanwhile, ASIC has also fined a Sydney mortgage broker $27,500 for advertising credit services on its website without the necessary licensing, authorisation or registration. This is the first time ASIC has issued a credit infringement notice since it took over regulation of consumer credit on 1 July 2010. Turn negatives into positives, urges lender The mortgage industry needs to focus on the positives the exit fee ban will bring for brokers and clients, says Tony Carn, general manager third party distribution of non-bank lender Homeloans. "With the ban now a reality, we need to think of this as a positive and how it will help enhance rather than destroy competition. It's just levelled the playing field for non-banks and their larger competitors." Carn says it is also an opportune time for brokers to vote with their feet over commission cuts and the high level of new business going to large lenders. "Ever since cuts to upfront and trailing commissions started to permeate through the broking industry, there has been enormous concern about the volume of business the majors are getting," Carn says. "So now the DEF bans are concrete, it's a great opportunity for brokers to show their dissatisfaction." • For more on non-banks approach to the post exit-fee market, turn to page 18. Gen Y Australians are ditching rental properties in favour of owning their own property, a new survey has revealed. Rams Home Loans quizzed 1000 mortgage holders under the age of 30, and a staggering 71% of respondents claim never to have rented a home. Gen Ys are likely to live at home for longer than their predecessors would have in order to save for a deposit -- 76% admitted to staying at home longer than they would have ideally liked. This is a trend particularly prominent in Sydney, Perth and Melbourne, where housing affordability continues to be an issue for first-home buyers. Rams Home Loans' CEO Melos Sulicich says, "There has been a long-standing trend towards extended living in the parents' home before leaving to rent. "What we are increasingly seeing is younger Australians using this time to save for their own home and avoiding renting. It's become a common financial strategy." Rams operating officer Susan Bannigan observes the trend for young adults to stay at home as a twist on a familiar scenario. "It's hard enough getting children to leave home, but when they say they want to stay at home to achieve a serious financial goal, it's incredibly difficult [for parents] to say no. "For them [the children] it's a win-win situation," she says. • Brokers discuss how they best serve Gen y customer on page 22. 14 | Mortgage & Finance brief News
Mortgage and Finance Brief 09
Mortgage and Finance Brief 11