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Owning a home, or paying off your home sooner, are higher on the priority list for most Australians than getting married and having children, according the latest Westpac Home Ownership Report.
The survey revealed owing a home or paying off the mortgage are top priorities for 57% of Australians already with a home or planning to buy within the next 12 months, while having children and getting married rated at 8% and 5%, respectively.
This is reinforced by the fact that the majority (77%) of people surveyed believe that the true meaning of ‘home ownership’ is achieved only when their home loan has been paid off in full, as opposed to when they first purchase a property and take out a loan.
Tony MacRae, general manager of Westpac Mortgage Broker Distribution, says he understands the emphasis Australians place on their dream to own a home outright and that they are doing this with the help of their local mortgage broker.
“The Westpac Home Ownership Report reinforces how important owning a home is to Australians and it’s striking that people are prioritising this ahead of kids and marriage. The report has also shown that Australians need advice to help them own their home sooner,” says MacRae.
In response, Westpac is launching a campaign to support Australians to pay off their home loans more quickly and ‘truly’ own their own home sooner.
#pb# “Our research indicates that many features designed to help pay off loans quicker are not fully understood, meaning Australians are missing out on opportunities to pay off their home loan faster. For example, more than one in three (37%) Australians with a home loan have an offset account, which is a great feature to offset and save on interest. However, more than one in three (36%) of those didn’t actually understand how an offset works so I doubt they are using it to their full potential.”
MacRae says Westpac has developed an offset calculator which allows borrowers to work out how much time they can reduce on their home loan term and money they can save by using an offset account.
“In addition to the offset calculator and to also help customer’s that choose to deal with a mortgage broker, we are running free property insight seminars for brokers, and providing them with free property report information from RP Data to help their clients understand the mortgage buying journey, for what they will need to consider to own their home sooner.”
According to Comparator's Quarterly Market Diagnostics for the Home Loans Report, which represents ten of the nation’s largest home loan lenders, including the four majors, there is around $59 billion ($58,526,199,000) in offset balances.
"What is remarkable is if you were to use these figures as a base and then look at the average discounted interest rate across all banks at 5.35%, those Australians are making an estimated annual savings of $3 billion ($3,131,151,647) on their offset accounts.”
MacRae says there’s also a lot of confusion about the types of loans available on the market.
“One in five (20%) of those intending to buy in the next 12 months had no idea what type of loan structure they should take up when they go to buy and of those who already had a home loan, over one in five (22%) didn’t even understand what a variable rate was,” he says.
While confusion exists, the general sentiment amongst Australians with a home loan is positive; with three quarters (76%) stating they believe now is a good time to be paying above their minimum repayments.
“At Westpac, we offer a range of useful home loan tools - we are the only major bank with an iPad app made specifically for brokers. Our Broker Hub Toolkit’s designed features are perfect for mortgage brokers to take their clients through the home loan journey and help them get ahead in making one of the important decisions in their lives which is to buy a home and achieve their dreams of home ownership.”
Today’s release of the Westpac Home Ownership Report coincides with the major lender’s announcement that it’s ending the current Premier Advantage Package )PAP) special home loan discount offers and introducing new ones.
From today, Monday August 19 to Friday 29 November 2013, Westpac is offering a 0.90% p.a. variable rate discount for new Premier Advantage Package (PAP) loans with combined borrowings > $250k. This replaces the 1.0% p.a. variable rate discount for new Premier Advantage Package (PAP) loans with combined borrowings > $500K, as well as the 0.90% p.a. variable rate discount for new full doc PAP loans with combined borrowings between $250k-$500k.
The 0.70% p.a. variable rate discount for new full doc PAP loans, with combined borrowings between $150k-250k, will continue until November 29, 2013.
