Australian Mortgage Industry Report finds Australian home-owners cutting back while first time buyers ask for equity share deals to get on property ladder

Approximately 23 per cent of Australian home owners have had to cut spending to pay their mortgage, according to a survey of 2,500 consumers, conducted as part of the Fujitsu/JPMorgan Australian Mortgage Industry Report (Volume 5: March 2007). This compares to two per cent in February 2005 and 12 per cent in February 2006, suggesting the two interest rate rises of May and August 2006 are taking their toll on Australian household spending.

The survey, which was completed in February 2007, also found that 68 per cent of borrowers would consider refinancing their home loan to save money, compared to 47 per cent in 2006 and 33 per cent in 2005. More than 30 per cent of respondents have already acted on this trend by refinancing their home loan in the past 12 months.

When it comes to first home buyers, almost 30 per cent cannot afford to enter the market, a significant increase from 2006, when 17 per cent stated they couldn’t afford to purchase their first home. Interestingly, more than 24 per cent of first home buyers said they would consider relocating to purchase (up from 18 per cent in 2006) while a staggering 51 per cent said they would consider an equity share deal to get their foot on the property ladder (up from 31 per cent in 2006).

Martin North, Managing Consulting Director, Fujitsu Australia and New Zealand said, “This survey indicates that there is a significant opportunity for lenders to develop a shared equity product for first time buyers. It also demonstrates that last year’s interest rate rises have had a significant impact on household spending with almost a quarter of households having to tighten their belts to meet rising mortgage costs. With more than two-thirds of respondents considering refinancing in the next 12 months, lenders must have a strategy for both retaining and acquiring new customers.”

These results form part of the latest Fujitsu/JPMorgan Australian Mortgage Industry Report. If you are a member of the media and would like to discuss these results with Martin North, managing consulting director, Fujitsu Australia and New Zealand, please contact Liz Greene to arrange an interview.