The vast majority of broker customers looking to buy an “upgraded” property would use a broker to fund the purchase, but nearly a fifth of upgraders are stressed about finding a broker or getting financial help, new research has shown.
According to ING’s Upgraders Homeownership Survey Report, for which market research company Galkal surveyed more than 500 people looking to buy/who had bought an upgraded property in the last/next 12 months, 294 of the 510 respondents had used a broker for their previous home purchase.
The report, which looks at motivations and sentiments around buying an upgraded home, revealed that the average Australian “upgrader” is motivated to buy a new property because they are looking for a “nicer house” (40 per cent) — with the vast majority looking for properties with three (or more) bedrooms.
Indeed, 62 per cent of upgraders said the property itself was the biggest influence on upgrading, with just 38 per cent saying that the area was the bigger influence.
Other common reasons for upgrading property were space constraints, which was a factor for a quarter of respondents, rising to 35 per cent for those with children, wanting more outdoor space (29 per cent), looking to “progress financially” (27 per cent), and wishing to move to “a better suburb”.
Majority of upgrade stresses related to finance
Nearly half (48 per cent) of respondents said that it was difficult to find a desired property to upgrade to — with more than half (51 per cent) saying that upgrading was or will be more stressful than when they were buying their previous home.
In fact, between organising finances and packing, some respondents compared the stress levels to that of wedding planning, starting a new job, or becoming a parent.
The vast majority of those that had upgraded, or where thinking about upgrading, said they believed organising finances and the process of organising the move (including packing) were the top stressors for them.
Nearly half (46 per cent) said that organising finances/getting a loan was the biggest stressor, while 41 per cent said it was the financial strain and/or saving.
ING’s Upgraders Homeownership Survey Report revealed that a quarter of upgraders would/have increased their mortgage for their new property by between $200,000 and half a million dollars.
Six per cent of respondents were willing to extend their mortgage by more than 6 per cent.
On average, upgraders were willing to increase their mortgage by $235,000.
Unsurprisingly, given the above, the number one worry when it came to buying an upgraded property was higher mortgage repayments (27 per cent), followed by concerns with being declined finance (22 per cent) and the loss of value in the property (16 per cent).
Notably, 18 per cent of respondents said that the process of actually getting a broker or financial help was one of their biggest stressors.
Other stressors included the process of organising the move (45 per cent), or not liking the new property.
More than a quarter (27 per cent) suggested they would bring in a flatmate or boarder to help with repayments of their mortgage for their upgraded home — with 31 per cent of recent upgraders having actually done so.
Speaking of the report, ING’s head of retail banking, Melanie Evans, commented: “Probably the biggest difference between purchasing a first home and upgrading into the next one is that, in most instances you’re not just buying a home, you’re selling one too. Managing your finances between those events weighs on the mind of Australians.
“Taking on a larger mortgage and having to consider the needs of others such as a spouse or children that may not have been in the equation during the last purchase are additional things that upgraders may have to contend with.”
Glenn Gibson, ING’s head of third party distribution, added that the stressors and anxieties being faced by upgraders could be a calling card for brokers.
Mr Gibson said: “Upgraders are turning to their brokers to help alleviate some of this stress so it’s important that brokers show empathy and prove they care about getting the best possible outcome for their client.”
He suggested that brokers are well placed to help upgraders as they understand their holistic position.
Mr Gibson recommended that brokers could follow the following steps to help calm their borrowers:
“If you focus on alleviating your clients’ stresses and delivering the best possible result for them, they’ll be more likely to want to recommend you or use you again,” he said.
[Related: Credit crunch weakening borrower confidence]
Annie Kane is the editor of The Adviser, Australia’s leading source of news, opinion and strategy for mortgage brokers.
As well as writing news and features on the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker podcast and In Focus podcasts and The Adviser Live webcasts.
Before joining Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.
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