Tuesday’s Federal Budget was a huge day for the mortgage broking industry, with a wave of new measures introduced to help Australians get onto the property ladder amid the ongoing boom.
Mark Haron, Executive Director at aggregator Connective and a Director at the Mortgage & Finance Association Australia (MFAA), explained how brokers should read the Budget.
“The big takeaway for brokers is that the government has really put a lot of focus on home ownership in this Budget,” he said. “There's been a whole raft of measures that will help more Australians get into their homes and obviously that increases the opportunity for mortgage brokers to do more business with more customers.”
“There's a significant number of schemes and opportunities here which brokers need to make sure that they get across. It's not just First Home Buyers: there's even little things like those looking to downsize. They might not need to borrow as much money but the support from brokers is going to be pretty crucial to them as well. I think it's going to be very good for mortgage broking and very good for the housing market.”
Creating activity at the bottom of the market is clearly a priority.
“It's the participation at the bottom of the market,” said Haron. “What that ultimately does is create a more sustainable housing market. It's not just about the top end of properties going up significantly in value, it's also about helping get into the housing market itself, which in the longer term is more sustainable. Obviously, the more participants we have in the home loans market, the better it is for mortgage brokers.”
With deposits so heavily subsidised, there is a concomitant risk of default.
“There's always an element of risk, but I think there's so many suitable people in those communities and they can participate,” said Haron. “Whether it's the single parents participation scheme, the Indigenous participation scheme, they all require significant assessment of their capacity to repay.”
“There's no shirking of the Responsible Lending standard when it comes to the requirements to pay back the loan, it's just that they're able to get in there faster because of the lower deposit. It does mean that it takes them longer to get into a stronger equity position, but in terms of capacity to repay, that's still getting scrutinised to a significant level to ensure that nobody is set up for failure.”