Genworth Financial, a leading provider of Lenders Mortgage Insurance both in Australia and abroad, has released their inaugural International Mortgage Trends Report. The report compares the mortgage industry and property market of Australia, Canada, India, Ireland, Italy, Mexico, the United Kingdom (UK) and the United States (US).
So how do home loans in Australia compare to those in the rest of the world?
- Almost half of all Australian home buyers surveyed make more than the minimum mortgage repayments,
- Strong house price growth provides an incentive for investors, but creates a barrier for First Home Buyers (FHBs),
- In order to own property, Australians are becoming increasingly indebted.
- Almost half of all Canadian respondents were positive about the outlook for the economy and housing market,
- Canadian respondents are generally comfortable with higher levels of debt,
- Government supports the availability of credit through its operation of the Canada Mortgage Bonds (CMB) program and other government backed securitisation vehicles.
- Indian home buyers are generally upbeat about the economy and their personal finances,
- However, there are some concerns about high house prices in Tier one cities after rapid growth in the last 18 to 24 months
- As a result, few are looking to buy property in these larger cities as they feel financially squeezed out, and demand may well shift to Tier two cities
- Moving forward, a combination of mortgage insurance and product innovation could help new home buyers get into the market sooner.
- The Irish Government has introduced austerity measures for the next four years in order to control
- Irish respondents had a generally negative perspective on the economy and their personal finances, with government measures a clear factor,
- FHBs are making up an increased share of the mortgage market, following improved affordability.
- Home buyer confidence in Italy remains weak, as 55% of Italians surveyed felt negative about their national economy and 46% said they were concerned about their personal financial situation,
- Housing affordability has improved in the last year due to lower house prices and interest rates,
- However, two thirds of those surveyed who would ideally like to buy property now are not in the financial position to do so.
- Mexicans who took part in the survey are relatively positive about the economy and their personal finances,
- Those who are struggling are worried about unemployment/underemployment, which is impacting on property market participation,
- Housing shortages have resulted in a fall in affordability, with the average age of a FHB over the last decade rising to 33 years,
- Very few Mexican respondents have had trouble meeting mortgage repayments, but their outlook is pessimistic.
- UK home buyers interviewed are pessimistic over the economy and their personal financial situation,
- Despite being more optimistic than average in regards to the property market, UK respondents will not actively enter the market in the next 12 months,
- FHB respondents in the UK are increasingly being priced out of the market,
- Eight in ten UK respondents expected no difficulty meeting their repayments over the coming year.
- More than half of Americans surveyed are nervous about how the economy will perform in the coming year,
- Nearly two in three feel that now is a good time to buy a home,
- Two thirds of American respondents feel that mortgage insurance helps them buy a home with a smaller down payment, and sooner,
- The average age at which a borrower is able to purchase their first home has increased from 27.3 years during the 1970s to 31.6 years in the 2000s.
As you can see there is a common trend of first home buyers becoming older across the world, and affordability becoming a major issue in countries that were largely unaffected by the GFC. There are other common trends of regulation restricting access to mortgages for many borrowers, which in some countries is necessary whereas in other countries may further decrease the ability of First Home Buyers to enter the property market.
You can read the report in its entirety on Genworth Financials website.
Source: Genworth Financial – International Mortgage Trends Report.