Mortgage Groups Get Creative
Australia’s mortgage industry is doing its part in ramping up consumer demand as the nation’s politicians incessantly wrangle over land release and supply-side issues.
Offering to repay graduate HECS fees is the latest move by the industry to attract would-be home owners into the market and offset Australia’s so-called housing affordability crisis.
A new product has been introduced by Merrill Lynch-owned First Permanent and follows groups such as PodProperty, which has a co-owner offer aimed at allowing flat mates, friends and families to band together and secure a foot on the residential property ladder.
In addition, there has been an explosion in providers offering no deposit home loans hoping to entice people into the market.
As politicians trade blows in a tit-for-tat fashion over the state of the nation’s economic health, mortgage providers and brokers are dealing with the reality of operating in a highly competitive market and seeking opportunities wherever they may present themselves.
Mortgage lender First Permanent is aiming to circumvent the fact many young people yet to get their feet on the proverbial housing ladder are already deep in debt from University.
To turn some of this group into customers sooner rather than later, it is offering recent graduates who are earning more than $65,000 a year a no deposit loan that will also incorporate their HECS debt into the loan.
Beyond the huge push in recent years for no deposit home loans across the market, Sydney-based mortgage broker PodProperty is carving out a niche by targeting people that would individually be unwilling or unable to service a loan for their chosen property by themselves.
PodProperty arranges legally binding Co-Ownership Agreements, which clearly set out each person’s rights and responsibilities.
So while politicians debate whether we’re better of today with bigger mortgages but at lower interest rates than a few decades ago when mortgages were relatively lower but interest rates had a tendency to blow out to the note of 18% – the industry itself is doing all it can to get more people aboard the great Aussie dream of property ownership.
Ian Grant says:
Dear Lynching Merrill – I am the MD of First Permanent and invented the “Graduate (HECS) No Deposit Home Loan” Thanks for your comment and interest. First Permanent WILL lend qualifying borrowers the entire purchase price PLUS repay all the Stamp Duty PLUS ALL the HECS debt.
The reality is that succesful young people with HECS earning just over $72,000 (gross) have HECS repayments of 8% of their gross salary IN ADITION to full tax and rent. How can these people save a deposit under these circumstances? My loan repays the HECS in full, the borrower gets a 10% discount on the HECS debt for repaying it early and gets to keep the governments $7,000 First Home Owner’s Grant.
No tricks or catches here. Please visit http://www.hecs.com.au for all the details or call 13 42 15 during business hours.
The debt Monster says:
Isn’t this just turning short term debt into long term debt?
HECS Burdened Accountant says:
This loan product is the answer to my prayers. I earn $125,000 gross per annum so my HECS repayments are $10,000 per annum on top of my tax. With the HECS repayments gone – I would easily be able to enter the home market. Those boys at Merrill Lynch are clearly smarter than Macquarie Bank or Westpac.