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MFAA Prosper : Mortgage and Finance Brief 12
16 | Mor tgage & Finance brief News The results are in A number of companies have released surveys over the past few months. Here are the headline findings from a selection of them: Company: Genworth Survey: Homebuyer Confidence Index Headlines: 36% of borrowers think now is a good time to buy a home – 2% down from March ... Confidence is 3% higher than in 2008 during the GFC ... 41% of borrowers have overpaid their mortgage in the past 12 months ... Cost of living, rising interest rates and existing debt obligations are the key reasons for mortgage stress. Company: ING Survey: ING Direct Financial Wellbeing Index Headlines: 28% of Australians are prepared to start spending again over the festive period after a spell of personal debt reduction... 59% of people are comfortable with their mortgage debt ... 37% would like to build their savings before rekindling personal spending ... 60% of households with a mortgage of over $100k would spend more if interest rates dropped ... 28% blame the volatile political environment on restricted spending. Company: QBE LMI Survey: QBE LMI Housing Outlook 2011-2014 Headlines: Property price growth of 19 -20% is forecast in both Perth and Sydney during the forecast period ... Melbourne is due to have the lowest price growth – 6% ... First home buyer demand is forecast to enter a recover y phase through 2012. The Reserve Bank of Australia cut the official interest rate for the first time in more than two years in November, taking it down to 4.5%. With three of the majors choosing to pass it on in full, MFAA CEO Phil Naylor believes the mortgage market will be far more competitive over the summer. “ The decision will no doubt make the borrowing market more attractive for both first home buyers and existing borrowers,” Naylor says. “ W ith the major banks all deciding to pass the cut on in full or in part, the framework has now been set for a new round of competitive pricing.” However, Naylor also urged consumers to seek expert advice from MFAA-approved brokers before responding to these new rounds of mortgage offers. Rate cut set to boost competition ASIC targets withdrawn applications If you lodged an application for a credit licence and subsequently withdrew it, ASIC is likely to look at you over the next few months to see if you are trading without a credit licence when you actually need one. Since the cut-off date for credit licence applications in January, ASIC has been actively searching for unlicensed credit providers, using Google, the yellow pages and trade magazines as the source for information. The industry has also become increasingly ‘self regulating’, as a number of licensed providers have alerted ASIC to the unlicensed status of their competitors. ASIC has a number of deterrence actions underway against unlicensed credit businesses. While this work will continue, the new campaign will be specifically targeted at the 637 businesses that withdrew their credit licence applications. First-time homebuyers are increasingly showing a preference for using brokers, the Commonwealth Bank/MFAA Home Finance Index for September has revealed. The index found first-time homebuyers’ preferences for using brokers had increased to 34.6% from 29.2% in May. Conversely, those preferring banks dropped from 54.2% in May to 43.8% in September. The survey also revealed that only 5.4% of potential first-time homebuyers are intending to buy property in the next six months and 20.5% believe property prices are currently too high. Furthermore, 44% were delaying a property purchase because of economic conditions, while 72.1% were worried about the debt they would take on. Across the full range of respondents, only 16.9% indicated they would buy a property in the next 12 months, compared to 19.1% in May and 21.6% in January. However, when consumer sentiment does become more positive, homebuyers will have cash in reserve. More than 25% are putting away more than 20% of their take-home earnings, up from 21.8% in January 2011. Of first-time buyers, 36 .2% are saving more than 21% of their income, the highest savings rate since November 2009. MFAA CEO Phil Naylor said the Index showed Australians were responding to their fears with frugality. “ With a recent interest rate cut, high savings and low mortgage stress, prospective homebuyers are in a relatively good position,” he said. “Reticence about buying property seems linked to the perceived state of the economy, not to the personal financial state of consumers.” “The important thing about the current situation is that savings are high meaning the money will be there when sentiment turns.” Brokers in favour: survey
Mortgage and Finance Brief 11
Mortgage and Finance Brief 13