Australian Mortgage Industry Report highlights peer disparity in attitudes towards mortgage lenders and awareness of interest rates

There is significant disparity in attitudes towards mortgage lenders and awareness of interest rates among different peer groups, according to a survey of 1,000 consumers, conducted as part of the Fujitsu/JPMorgan Australian Mortgage Industry Report (Volume 4).

The survey, which was completed in August 2006, found that Baby Boomers** (61 per cent) and Generation X*** (41 percent) prefer to use a mortgage broker, compared to a significantly lower number of Seniors* (22 per cent) and Generation Y**** respondents (12 per cent). Conversely, 56 per cent of Seniors and 21 per cent of Generation Y respondents said they would prefer to use a bank for their home loan needs.

Generation X respondents were the most acutely aware of mortgage interest rates with 88 per cent claiming they could quote the interest rate on their mortgage while only 22 per cent could quote the interest rate on their credit card.

Baby Boomers were also considerably more aware of their mortgage interest rate with 55 per cent of respondents claiming they could quote the interest rate on their mortgage, compared to 28 per cent who could quote the interest rate on their credit card. On the other hand only 32 per cent of Seniors and 24 per cent of Generation Y respondents were aware of the interest rate on their home loans.

When it came to mortgage preferences, Generation X showed the highest predilection towards fixed rate loans, with more than 51 per cent claiming they would consider a long-term fixed rate re-finance compared to 31 per cent of Baby Boomers, 13 per cent of Generation Y and one per cent of Seniors.

Martin North, Managing Consulting Director, Fujitsu Australia and New Zealand said, “Lenders must understand the fundamental differences between peer groups, in terms of what they want and need from their lender, and target them with tailored products accordingly. Those that don’t, run the risk of being generic, and therefore irrelevant, to the diverse needs of their customer base.”

The survey also found that a higher proportion of older Australians (Seniors and Baby Boomers) have an investment portfolio (71 per cent and 68 per cent respectively), although this is not necessarily property related. In the case of Seniors only 41 per cent had investment properties compared to 67 per cent of Baby Boomers.

Owner occupied mortgages were most prevalent amongst the Generation X group (55 per cent) while investment mortgages were significantly more popular in the Baby Boomer group (59 per cent). Unsecured lending was most common in the younger peer groups, with 36 per cent of Generations Y and 22 per cent of Generation X with unsecured car loans.

Martin North said, “With new superannuation rules having a potentially significant impact on the supply and demand ratio for property, financial advisors should be encouraging Seniors to invest further in property.”

*Seniors – over 60 years old **Baby Boomers – between 45-60 years old ***Generation X – between 30-45 years old ****Generation Y – between 18-30 years old