iscover
Over half (57 per cent) of home owners wished they had done more homework before entering a loan, according to the latest Mortgage Choice Home Loan Report.
Another 62 per cent believe there may have been a better home loan option, and 65 per cent were confused by at least one part of the process.
Even more concerning is the 14 per cent of respondents who felt they had made the wrong decision when purchasing their first home.
There were a variety of mistakes borrowers said they had made when picking their home loan. The most common were:
- Focusing too much on rate (18 per cent).
- Assuming all home loans are basically the same (18 per cent).
- Failing to consider how their needs might change in the future (18 per cent).
- Opting for major lenders without considering other options (16 per cent).
- Assuming home loan pre-approval guarantees final approval (13 per cent).
Mortgage Choice CEO Anthony Waldron said that research, preparation, and expert advice can make “all the difference” and help mitigate the chances of experiencing buyer’s remorse.
“Homeowners who feel they chose the wrong property cited a lack of research, rushed decisions, and failure to plan for the future as the key reasons they felt regret about their first property purchase,” said Waldron.
“The decision to buy property is one of the biggest financial commitments most Australians make. This new data highlights how important it is that buyers are supported with expert advice around planning and budgeting.”
Brokers play a vital role in easing concerns. Waldron said it’s the responsibility of a mortgage broker to inspire confidence in the buyer by being prepared and providing a professional service.
Refinancing can help
According to the report, the value of refinanced loans is up 22 per cent from last year.
Following two rate cuts from the Reserve Bank, borrowers are leveraging the opportunity to secure a more competitive rate and ease financial burden.
The RBA meets again tomorrow (12 August), and many economists are predicting another 25-basis-point cut.
Home owners are keeping on top of these opportunities, with nearly three-quarters (72 per cent) reviewing their home loan at least once a year. This figure sat at 59 per cent last year.
The key reasons behind reviewing their home loan were:
- To lower my interest rate (49 per cent).
- To consolidate debt (11 per cent).
- To increase or reduce my loan term (10 per cent).
- To lock in a fixed rate or switch from fixed to variable (or vice versa) (10 per cent).
- To access home loan features like an offset account or redraw facility (10 per cent).
Brokers should expect refinancing trends to continue as borrowers look to lower their repayments.
[Related: FHB activity surges throughout June]
