Brokers well placed to advise upcoming ‘surge’ of FHBs

The report looked back at historic data regarding the Australian lending market and outlined its forecasts for the key housing markets over the next three years.

According to the report, first home buyers (FHBs) have been “surging” back into the market, with lending to this segment rising by 28.4 per cent over the 12 months to June 2018. This was led by a 74 per cent increase in lending to FHBs in Sydney, the data showed.

Looking forward, the CEO of LMI suggested that FHB demand will continue over the near to medium term.

Mr White said: “We haven’t seen the first home buyer market this strong since the Australian government’s 2008 stimulus plan following the global financial crisis, which saw $1.5 billion allocated to first home buyers.

“The increases in the volume of first home buyers has been supported by improvements in affordability and first home buyer incentives.

“Record low interest rates in recent years had seen a surge in investor lending, but this year’s report shows investor lending scaling back, which should also provide further room for first home buyers over the next couple of years.”

Mr White noted that lenders’ responses to regulatory restrictions had contributed to the softening of the market while state government incentives have encouraged first home buyers to enter the market “after several years of being pushed out by domestic and foreign investors”.

Speaking to The Adviser about the growing FHB market, Mr White suggested that brokers would be well placed to help educate the growing segment about their financial commitments.

He said: “For me, the biggest thing for mortgage brokers [to do] is around communication and education to consumers.

“This [home ownership] is only an opportunity for those consumers that can afford it. And although we know that there is a fear of missing out among parts of the population, we should only allow people to get a mortgage and make that commitment if they can afford to do so.

“A mortgage is, undoubtedly for most people, the largest financial commitment that they’re ever going to make in their life. [When it comes to] buying a house and taking on the mortgage, and they must do that with great caution, I think a mortgage broker’s role is to make sure that these people have access to good information and understand what their commitments are.”

Noting that the QBE Australian Housing Outlook 2018–2021 is “freely available to brokers and freely available to all consumers as well,” Mr White outlined that utilising forecasting data could help cement a broker’s position as a key source of information and education.

“If [this report] goes some way to help educate people around what can happen in housing markets and financial markets, then that’s a great thing. And mortgage brokers can promote some of that knowledge to consumers so that, hopefully, we can get people making better decisions.”

Mr White concluded: “Our business this is all about helping people get into a home. But we are conscious that it is just as important that, once they’re in there, that can actually stay there.”

[Related: Consultation on mortgages a ‘fundamental human need’: ANZ CEO]