​First home buyers ‘lost in the wash’

by Amy Rosenfeld12 Feb 2014
Outdated processes mean first home buyer stats are likely not as dire as they appear, say industry experts.

While the latest ABS statistics saw first home buyers rise slightly to 21.7% - up from 12.3% in November -  but Mortgage Choice spokesperson Jessica Darnbrough says these statistics don’t tell the full story.

“While brokers may know that they’re a first home buyer unfortunately when they’re applying for a loan with a particular lender they don’t have to tick a box that they’re a first home buyer unless they’re applying for a grant.

“For us, first home buyers still account for about one fifth of our loan enquiries so they still make up a good proportion of our book and they always have done and we believe they will continue to do so.”

Brisbane Business Finance director Peter Fraser says he makes a conscious effort not to tick the first home buyer box when making an application for buyers that are not eligible for a grant.

“In the three most populous states – Queensland, New South Wales and Victoria – there’s not first home buyer grant for existing homes, so when I enter the data I leave it out,” says Fraser.

“In fact I tried to do one last week that were first home buyers and when I tried to put them in as first home buyers it kept wanting me to enter an amount for the grant, so in the end I had to treat them as non-first home buyers even though that was clearly not the case.”

Most of the aggregator and lender software was written when all first home buyers were eligible for a grant, and therefore tallying up the number of grant applicants was the easiest way to collate data on first home buyers.

This software is now out of date, says Fraser, and needs to be changed to reflect the current situation.

“That’s the only way of doing it, and that sounds really simple, but I’ve been involved with software years ago and sometimes what seems like a really simple solution can be a hellish nightmare when dealing with huge cloud software programs. So I think they will update it, but it will take time.”

Darnbrough also raises software updates as an option, but also suggests improved collaboration with brokers as a way forward.

“Maybe the data that is being recorded by the Australian Bureau of Statistics is as right and as true as it can be but perhaps there needs to be more liaising with the third party distribution channel and what they’re telling the lenders,” says Darnbrough.

An increase in off-the-plan purchases and buyers choosing to purchase investment properties as their first home could have also contributed to slightly off-kilter statistics, says Darnbrough, as off-the-plan purchases by first home buyers will not show in statistics for a number of years, and many first home buyers are likely to have been identified in statistics as investors.