Trillion-dollar home loans


According to the latest Australian Bureau of Statistics figures, Australians now owe $1,170,774 million collectively on mortgages with 2.7m mortgages on owner occupied houses* and 1.7 million on investment properties**. Of the 34.9% of us with mortgages, the median mortgage monthly repayment is $1,800, which is about one third of net income in those households. If you’re one of the 29.6% who rent, on average you are paying about $1,235 a month*.

Australians use mortgage brokers for about 40% of their loans and a recent Market Intelligence Strategy Centre report using data from brokers showed that about 37% of all the mortgages they arranged in the last quarter went to the smaller regional banks such as Suncorp Group (ASX: SUN) and Bendigo & Adelaide Bank (ASX: BEN). However, the big four banks used their multi-brand strategy successfully to retain market share through lenders like St. George, BankSA, and Bank of Melbourne (all owned by Westpac (ASX: WBC)) and BankWest (owned by Commonwealth Bank (ASX: CBA)).

Suncorp in particular is singled out in the report for its performance in Queensland with incentives to borrowers through a .90% life of loan discount and incentives to brokers with improved first-year commission bonuses.

Following the recent RBA decision to cut rates by 25 basis points, very few of the lenders have passed on the full amount, but one that has is UBank (owned by NAB (ASX: NAB)), which now offers a variable interest rate of 5.82%, but only you are refinancing. If you are looking for a new mortgage, ING Direct is offering a sub-6% rate while majors such as ANZ (ASX: ANZ) and Commonwealth Bank both want 6.6%.

Foolish takeaway 

The days of having to have a long-term relationship with your bank and needing a steady savings record are long gone. A mortgage lasts for a long time and is probably the biggest expense facing you, so remember that you are the customer and shop around for a deal. Mortgage brokers play a useful part for many of us and the Internet makes it much easier to compare rates.

* source 2011 Census, ** source Australian Tax Office statistics 2009/10

If you only invest in one company this year, make it our “Top Stock for 2012-13.” Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

More reading:

Motley Fool contributor Tony Reardon owns shares in ANZ and CBA. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

OUR #1 DIVIDEND PICK FOR 2016...

Forget BHP and Woolworths. This "dirt cheap" company is growing like gangbusters, and trading on a 5.6% dividend yield, FULLY FRANKED (8% gross). With interest rates set to stay at these low levels for years to come, for hungry investors, including SMSFs, this ASX company could be the "holy grail" of dividend plays for 2016.

Enter your email below to discover the name, code and a full investment analysis in our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2016.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.