Picking the Lock – 500,000 Dreams Turn to Reality
Half a million prospective Australian home-owners may now be able to enter the prized Australian capital city housing market, according to ground-breaking new analysis from BOQ.
Despite earning the average Australian wage, a hidden generation of 25 to 34 year olds have been shut out of the property market thanks to higher prices in the inner city areas they generally want to live, as well as confusing application procedures and bewildering package deals that often favour higher value borrowers.
BOQ Group Executive, Retail and Online Banking, Matt Baxby said, “Hobart is Australia’s home-owner haven while Sydney, Melbourne, Canberra and Darwin, which have for too long been a pipedream for the majority of average Australian wage earners, have finally been unlocked.”
Based on the average Australian wage of 25 – 34 year olds1, with 31 being the average age of an Australian first home buyers2, Hobart is the least expensive capital city to own a home followed by Adelaide and Brisbane.
Sydney, Melbourne, Canberra and Darwin are the most challenging capital cities for first home buyers to get a foot in the door relative to the maximum borrowing capacity of average wage earners living there.
A July 2013 Auspoll survey revealed that housing affordability was the number one issue for young people with 84% of Australians believing housing affordability to be a great concern.
However, thanks to a revolutionary new loan offering called Clear Path from BOQ, home ownership in Australia’s capitals could once again be a reality for Australia’s first home buyers.
“We are unlocking the capital city housing market to a new generation of buyers, a need that is stark given one in three young Australians believing they would be permanently locked out of the housing market.
“This is particularly the case in our capital cities where young people generally prefer to live within 10km of the city centre for lifestyle reasons,” said Mr Baxby.
With Clear Path BOQ achieves what the Big 4 can’t, a simple and transparent product structure combined with a low interest rate of 4.94% that doesn’t discriminate based on the amount borrowed or the value of the property, but simply offers opportunity and surety to customers.
“Clear Path is making dreams a reality for thousands of first home owners. Sydney, Melbourne, Darwin and Canberra, four of Australia’s most demanding housing markets, could be finally unlocked to a new generation of buyers thanks to this new product.
“Clear Path allows customers to feel confident that no matter how much or little they want to borrow, they have the certainty of knowing that, as long as they meet the required credit standards, they would be offered the same rate regardless of the size and worth of their property, from a single bedroom apartment in Potts Point to a four bedroom double garage home in Penrith.
“What you see is what you get – there are no hidden package fee surprises that emerge after the first 12 months or so and first home-buyers aren’t discriminated against by not being able to access the under the counter interest rate discounts being offered to other borrowers.” Mr Baxby said.
Table 1: Average wage and salary (gross) of 25-34 years olds 4
The following assumptions have been made for the purpose of key metric modelling used in the analysis of this release
- Assumes mortgagees are borrowing at 90% of the value of the home
- Life of the loan is 25 years
- Joint wage/joint ownership with partner
- Assuming both parties have been residents of Australia for a full year
- No reportable fringe benefits
- No employee super contributions
- No education fees (HELP)
- Does not include the private insurance rebate
- No dependents
- Assumes mortgagees are in a relationship/married/engaged with the joint wage/ownership party
- Does not include Medicare levy or Medicare levy surcharge
- Mortgage repayment limit set to 40% of fortnightly gross income of couple. While this is a commonly used indicator it should be by no means used as advice and is dependent on individual circumstances.
- Calculations based on BOQ 4.94% variable interest rate for its Clear Path home loan, compared to the average interest rate of 5.93% of the Big 4’s equivalent product.