You have 0 free articles left this month.
Advertisement
Powered by MOMENTUM MEDIA
lawyers weekly logo
Compliance

September 07: Forty year mortgages to combat affordability crisis

6 minute read
The Adviser

Genworth Financial has put its weight behind forty year mortgages, heralding the product as an important tool to combat the housing affordability crisis.

Martin Barter, Genworth Financial’s CEO, believes that longer term loans are the key to getting people into home ownership earlier.

For lenders looking for a point of difference in a competitive market, the addition of 40 year products to their offering can also add considerable value to buyers most exposed to affordability constraints.

This content is available exclusively to
The Adviser premium members.

“Reduced monthly repayments are a key benefit of a 40 year loan,” says Barter. “They are particularly suitable for the first time buyer market as this is the sector hardest hit by housing affordability.”

 
 

Genworth is the only Australian insurer that will currently insure 40 year loans.

Already a mainstream mortgage option overseas, the loan has proven to be especially popular in Canada. US borrowers are also well accustomed to longer term loans, with the 50 year loan growing rapidly in popularity.

Despite this strong presence in the international markets, 40 year mortgages currently represent only a fraction of the home loans written in Australia.

Frank Knez, associate director of product and marketing with Resimac believes that, with the right marketing, the product will gain popularity in Australia.

“Mortgage managers should focus their marketing efforts on the features of the product, and how they are relevant to the borrower,” says Knez.

The longer term is one such benefit and can be promoted to first home buyers who may not be comfortable with the repayment amounts on shorter loans.

“A loan product with 40 year terms provides additional solutions to borrowers who may not otherwise meet the serviceability requirements of a traditional 30 year loan,” says Knez.

default
You need to be a member to post comments. Become a member today
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more