Rimas Veselis - 2 Sep, 2021

The Hottest New Mortgage Trends For the New Financial Year

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The ever-changing mortgage broking industry is always full of surprises, and identifying current trends can play a major role in serving customers best. 

While predicting every major trend is extremely difficult, there are some signs to be aware of that can lead to more successful predictions and being prepared for what is on the horizon.

From family loans to COVID-19 inspired market shifts, the following are some mortgage trends that industry experts anticipate occurring throughout the new financial year. 

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Further use of digital technology for mortgage applications

As a result of the impact of COVID-19, many mortgage brokers have significantly improved their customer relationship management (CRM) systems for processing applications and paperwork digitally.

This means many companies can now provide their services entirely online and in a more automated fashion that has driven productivity and ease of use for consumers.

couple organise new mortgage digitally

The “bank of mum and dad’ becoming more popular than ever

Due to the massive hurdle of surging property prices, many first-time homebuyers are seeking assistance from ‘the bank of mum and dad’ (also referred to as BOMAD) to get into the Australian housing market.

According to recent findings from Digital Finance Analytics, the BOMAD is now Australia’s ninth-largest mortgage lender, with 60% of first-time buyers reporting that they have received financial assistance from their parents to make their purchase.

Large wealth transfers to first home buyers

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Following the rise of BOMAD borrowers, many families are passing down their wealth in the form of early inheritances and cash gifts for deposits.

Mortgage broker and Brighter Finance owner Marcus Robert believes that more and more wealth will shift between generations in order to secure their children’s futures.

“Worried their children may never be able to afford their own home, a growing number of parents are putting their hand in their pocket to give their kids an early inheritance by either buying them their first home or significantly contributing to their first home,” Mr Roberts said.

“This increasingly common trend is part of the legion of parents taking charge of their adult children’s housing future, including acting as guarantors on mortgages, forking out for the deposit and renting their investment property to their offspring at either greatly reduced rates or at no cost.”

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Split loans gaining prominence

To get the best of both worlds that fixed rates and variable rates each offer, split loans are available where 60% of the loan is charged a fixed interest rate for a set period, and the remaining 40% is variable to form a split loan. 

“60/40 splits have become very popular,” Mr Roberts said. “For people keen on fixing a portion of their loan, but don’t want to miss out on some of the appealing features of a variable home loan, a 60/40 split home loan has become a commonly-used compromise.”

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Regional moves gaining momentum

Another shift brought on by the effects of COVID-19 is the large increase in families trading in their smaller city-centre homes for more spacious regional properties.

Due to frequent lockdowns taking place across Australian CBD’s and many employers offering increased work-from-home opportunities, it’s very likely that regional and more suburban homes will continue to be sought after for the foreseeable future.

regional Australia new mortgages

First home buyers being more prepared but more frustrated

While this is nothing new, a minimal supply of homes combined with Australia’s average property price continuing to rise faster than ever before will leave many potential buyers extremely frustrated and disheartened.

On the flip side, the tight market has meant many first home buyers are doing their homework well in advance and coming fully prepared to begin their home loan application process.

Words by Rimas Veselis


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