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Nearly a third of borrowers will be FHBs next year

by Reporter5 minute read

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First home buyers will be the largest contingent of borrowers taking out a mortgage in the next year, new research has suggested.

Nearly a third (30 per cent) of consumers taking out a home loan in the next year will be first home buyers (FHBs), according to an Aussie Home Loans survey of 600 Australians aged 24 to 55 who intend to take out a mortgage in the next 12 months.

Refinancers will be the second-largest group of consumer looking for a home loan (25 per cent), followed by investors (24 per cent) and movers (22 per cent).

Aussie CEO James Symond said that there was a range of factors luring FHBs into the housing market.

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“The slight cooling of some of our larger property markets, current record low interest rates, growing choice and complexity in home loans, and improved first home buyer grant schemes would all be factors,” Mr Symond said.

Further, Aussie revealed that an increasing proportion of FHBs intend to use a mortgage broker to secure their loan.

“Year-on-year, we’ve had a 55 per cent increase nationally in the number of first home buyers using an Aussie broker,” Mr Symond said.

“This is a hugely positive sign and shows savvy newcomers to the market are seeking out expert mortgage advice and guidance.”

Further, the research revealed that the FHB segment takes longer than any other group to settle a home loan.

According to the data, on average, FHBs take 100 days to settle a loan, 35 per cent longer than the average borrower refinancing their loan.

The research found that FHBs feel less confident about comparing and selecting the right home loan, and were least confident about the current economic climate.

Mr Symond therefore highlighted the role that mortgage brokers play in educating clients and assisting them through the home loan process.

“We know first home buyers often need more education and support so they can feel confident in selecting the right home loan,” Mr Symond added.

“Some first time buyers want to be educated steadily and taken through the mortgage process step by step, while others want to outsource as much as possible so it’s quick, easy and requires little of their time,” the CEO said.

“Saving customers money, time and hassle are key elements of Aussie’s proposition, and I believe this is why we’re seeing such strong growth in first home buyer activity.”

Government initiative failing to assist FHBs

The lack of FHB confidence and awareness of the market was reiterated in another survey this week.

Gateway Bank surveyed more than 1,000 Australians about the First Home Super Saver Scheme (FHSSS).

First announced in the budget last year, the scheme will enable FHBs to contribute up to $30,000 (but no more than $15,000 a year) to their superannuation account, with FHB couples eligible to contribute up to $60,000.

FHBs will be able to access their tax-exempt voluntary superannuation contributions from 1 July 2018.

It is hoped that the move will “accelerate” deposit saving by up to 30 per cent.

However, the latest Gateway Bank survey found that the scheme is failing to get cut through to the FHB market, with 56 per cent of Australians unaware of the initiative.

The research also revealed that of the respondents who were aware of the FHSSS scheme, only 1 per cent could directly identify its components.

Baby Boomers were most aware of the FHSSS scheme (36 per cent), followed by Millennials (34 per cent) and Generation X (30 per cent).

Gateway Bank CEO Paul Thomas said that the government needs to better promote the scheme to ensure that FHBs reap its benefits.

“The scheme is a good idea in principle, but in order to make a real impact, the government and industry need to take action to ensure the public is not only aware of the scheme but are also educated on how they can take practical steps to take advantage of the initiative,” Mr Thomas said. 

“It’s imperative to take an early intervention approach to education around the initiative; otherwise, by the time first home buyers look into their first mortgage, it will be too late.”

[Related: New legislation provides tax cut for first home buyers]

Nearly a third of borrowers will be FHBs next year
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