Forty-eight per cent of first home buyers have put off buying a home because the application process is “too daunting”, according to new research.
According to the 2018 St.George Home Buying Survey, 2.2 million Australians plan to buy their first home in the next five years.
However, more than a million (1.05 million) Australians could potentially be prevented from doing so due to the complexities of the application process.
The 2018 survey found that 48 per cent of first home buyers admitted they’ve put off buying a home because the application process is just too daunting.
When asked about the loan application process, 20 per cent of borrowers said that they would prefer to visit the dentist than fill out a “traditional” home loan application.
Further, 19 per cent said they would rather “dine with the in-laws”, 18 per cent would prefer to “sit in peak-hour traffic” while 16 per cent said they would endure a 14-hour flight without entertainment rather than fill out the loan documents.
Barriers to filling out the loan applications included “too much red tape or paperwork” (25 per cent), “not knowing where you actually stand” (20 per cent) and the length of the process (20 per cent).
Speaking of the findings, which were released in tandem with the launch of St.George’s new online mortgage application tool, the bank’s general manager, Ross Miller, said: “Our research suggests home buyers, particularly first home buyers, are still optimistic about owning a home, but the actual application process is forcing Aussies to throw it in the too-hard basket.
“So, we’ve built an entirely new online application platform to combat these frustrations and put the power back in the buyers’ hands.”
He added: “When you also consider 90 per cent of home buyers start their home loan search online, digitising the experience was a no-brainer for us — bringing together the best of new technology and our 80 years of experience to help Aussies feel confident and supported throughout the entire home loan process.”
Mr Miller added that the bank also offers borrowers access to a “St.George home loan expert” should they “get stuck along the way”, noting that assistance is also available seven days a week via live chat or over the phone.
“As a family bank, it’s important that customers can talk to an expert at a time that’s convenient for them — whether that’s after work, on a Saturday once the sport drop-offs and pick-ups are over, or even on the couch in front of the telly after putting the kids to bed,” the bank general manager said.
While St.George has released the findings in tandem with the launch of its new, online home loan application tool (which aims to simplify the process and help educate buyers about the costs involved in the mortgage process), the research also affirms why more than half of all mortgagors use a mortgage broker.
A report released by Deloitte Access Economics earlier this year outlined that lodging loan applications and managing the process to settlement were the most time-intensive tasks of a broker, with just 12 per cent of a broker’s time being spent post settlement.
Similarly, Victoria-based Smartline broker Deb Smith told The Adviser’s Elite Broker podcast last month that she felt that brokers were “doing more work than probably any broker [has] ever done just to get a deal over the line” and that “sometimes [it feels] like you’re doing double the work for an application and getting paid the same amount of money”.
However, Ms Smith suggested that while the work load and expense checking had increased, the value proposition of a broker had, too.
The Wallan-based broker added that financial literacy education and helping clients take responsibility for their financial decisions was a key part of her job as a broker, and one she was “passionate about”.
She elaborated: “To me, the worst possible outcome [is when a borrow has] gone and seen a broker or a bank and they don’t actually know what they’ve done. And to me, that’s horrific, because, yes, it’s complicated — because they don’t work in our world and it can be complicated — but I do think that there’s a way that you can simplify it for people and make it palatable for them so it’s really easy to understand.
“And rather than them sitting there and saying: ‘Well, you tell me what you think I should do. You know better.’ You’re giving them the information so that they can actually make that decision and feel confident in the decision they’re making, because it’s from an educated space. So, that’s the one thing that I’m really passionate about.”
Find out more about Deb Smith in The Adviser’s Elite Broker podcast.
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