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The Big Story: A perfect storm for first homebuyers

First homebuyers are flocking back to the property market as conditions improve.

Video transcript below:

Donna Sawyer, Australian Broker News TV
Donna Sawyer:
 Hi, I am Donna Sawyer and you are watching the Big Story on Australian Broker News TV.

First Home Buyers are swarming back to the property market for the first time since the peak of the global financial crisis.  Fresh data suggests that there has been a significant spark in recent first home buyer activity as the newcomers move to make the most of the improved market conditions.  Chris Slater, AFG State Manager for New South Wales says the comeback is a welcome boost to the property sector.
Chris Slater, AFG
Chris Slater:  It’s almost like a perfect storm.  We are now in an environment where interest rates are low, so affordability at the end of the day is up.  Borrowers capability is up, we are seeing vacancy rates are low and housing prices are down.  So from that perspective, we think it’s a perfect storm for first home buyers and we obviously, first home buyers are so important to our market, so we are actually really pleased that’s how we are seeing first home buyers return in the numbers that they are.
Donna Sawyer:  Mark Bambagiotti from Mortgage Choice says the surge comes ahead of the end of year expiry of the stamp duty concession. He says the activity will likely return to normal levels in 2012.
Mark Bambagiotti, Mortgage Choice
Mark Bambagiotti:  Probably it’s coming back a little bit more in recent times to higher than natural levels.  Hopefully we are going to see it return to natural levels in 2012, but definitely at the moment we are probably seeing a high number of enquiries than we would normally see in relation to first home buyers in the current time frames.
Donna Sawyer:  Gerard Hansen of Homeloans Limited says the new wave of first home buyers is not afraid of doing their homework and they are more conscious than they have been previously.
Gerard Hansen, Homeloans Ltd.
Gerard Hansen:  There is still a bit of cautiousness out there, I think amongst first home owners. We have one couple approve yesterday for $530,000 which they can afford, they definitely can afford to pay, the loan size, but at the same time she wants to drop it down by $100,000 because they just wanted to feel comfortable.  They weren’t sure where the market was going, whether rates, pretty comfortable rates were going to stay around that 6 – 6 ½% mark, but they just didn’t want to extend themselves too much, which is sort of bit rare, but they are more educated too.  I think that’s a sign of that market too, that first home owners are actually more educated than probably from 2 or 3 years ago.
Donna Sawyer:  And they are not necessarily borrowing from the big four banks.  Chris Slater from AFG says the non-majors are rapidly increasing their market share.  
Chris Slater:  We actually think the non-majors have held up pretty well over the last 12 months, we have seen them increase their mortgage, their percentage of the mortgages that they are getting and we have seen some really strong results from Suncorp specially in the first home owner sector, Suncorp basically has received more first home owner customers than any other of the non-majors.  We have seen some really good fight backs from Citibank and ING and our own AFG home loan is going pretty well.  So overall hovering around that 20% of the market, which is a long way from the 10% where we were after the GFC.  So overall we have seen some very good performances from the non-majors.
Donna Sawyer:  So how can brokers capitalise on the first home buyers’ business?  Mark Bambagiotti from Mortgage Choice says building strong referral relationships is key.
Mark Bambagoitti:  First home buyers tend to mix in the same circles as other first home buyers.  So if they are providing that service then usually they are going to get the referrals from those clients that they are speaking with at the moment.  Also if they have strong referral relationships with real estate agents and other referral partners, that’s obviously a way to tap into the increasing number of first home borrower enquiries that we are seeing in the marketplace.  
Donna Sawyer: Gerard Hansen from Homeloans Ltd. says time is running out to catch this particular wave of first home mortgage holders, but brokers have a small window of opportunity to make their move.
Gerard Hansen:  Probably if you have got an older client base, I will be emailing your older client base that possibly have children 18, 19, 20, they got a great capacity there, they may go for some family equity to help that sibling get into a property.  So you can target that base quite comfortably because you have got a trusted relationship generally with that older client base.
Donna Sawyer:  For more on first home buyer activity and other mortgage industry news, click around the Australian Broker News website.  I am Donna Sawyer and I will see you again next week with the Big Story.