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Property price rises breed bespoke banking products

1 June 2016 |Consumer Banking

First home buyers in Australia are adding nearly $175 to their mortgage for every week they wait to enter the property market.

That's according to data released today from the Adelaide Bank*/Real Estate Institute of Australia Housing Affordability Report, which shows the average amount borrowed by first home buyers increased by $9067 in the 12 months to March 2016.

New South Wales rose 7.75 per cent – or an eye-watering $28,034 – over the 12 months, and claims the highest amount borrowed by first home buyers of any state, $389,867.

(See overleaf for further state-by-state breakdowns.)

Bendigo and Adelaide Bank's Chief Customer Officer Marnie Baker said it was no surprise that continual price rises were blocking many young people from buying their first home.

First home buyers now make up just 14.6 per cent of the total owner-occupier market, well down on the long-term average of 19.7 per cent, and the lowest point since the June quarter 2004.

"The average first home buyer in Australia is now borrowing around $331,467, a sum that seems out of reach for many," Ms Baker said.

Ms Baker said the increasing squeeze meant customers were looking at even more ways they could save money on their mortgage.

"These are educated savvy consumers who want a tailored lending product with a fair price," she said.

"That's why we've developed a new loan bundling product we call Bendigo Connect."

Bendigo Connect allows customers to accumulate home loan rate reductions for each product they choose to bundle, whether that's a transaction account, credit card, term deposit or insurance.

There are nine different products and customers can choose up to three to obtain the full 0.15 per cent reduction^.

Plus these products also have their own reciprocal benefits, the waiving of annual credit card fees for example.

Since its launch just a few months ago, it now makes up more than 50 per cent of Bendigo Bank's new home loan applications.

"This is by far the best take up we've ever had on a new lending product," Ms Baker said.

"Customers are able to select products that truly meet their needs, and that's our ultimate goal, because we're focussed on making it easier for customers to manage their finances and build their wealth."

State Average loan to first home buyers Fast fact
Australian Capital Territory $321,900 ACT recorded 451 home loans to first home buyers, a 6 per cent decrease on the March quarter of 2015.
New South Wales $389,867 First home buyers make up only 10.9 per cent of NSW's owner-occupier market – the lowest level across the nation.
Northern Territory $298,167 NT recorded the largest annual decrease of first home buyers, down by 23.4 per cent compared to the March quarter of 2015.
Queensland $289,633 Of all Australian first home buyers, 20.8 per cent were from Queensland.
South Australia $266,767 In SA, 1,493 loans were made to first home buyers, an 8.1 per cent increase when compared to the March quarter of 2015.
Tasmania $234,933 In Tasmania, the average loan to first home buyers increased 13.2 per cent compared to the March quarter of 2015.
Victoria $343,067 The average first home buyer loan in Victoria rose by 7.4 per cent when compared to the same time last year.
Western Australia $323,133 Western Australia has the highest proportion of first home buyers on the owner-occupier market nationally – 20.2 per cent.
*Bendigo and Adelaide Bank operates a number of brands, including Bendigo Bank (retail banking), Adelaide Bank (third-party lending), Rural Bank and Rural Finance (agribusiness) and Delphi Bank (Hellenic banker).
^Up to 0.15% discount off APR available. Eligibility criteria apply. Call 1300 BENDIGO for more details.
Credit provided by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 Australian Credit Licence 237879. Terms, conditions, fees and charges apply. Full details available on application. Lending criteria apply. This information is of a general nature only and is not advice.

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