In the Press
10 March 2011
40-year loan plans as funding costs rise
AAP
Also on Australia has yet to go down the path of passing off higher mortgage costs to the next
generation, with standard home loan stopping at 25 rather than 40 years, as is the case in
some countries, a mortgage conference was told.
And while countries like Canada, the US, Japan and China used innovative measures to make home ownership accessible to younger people, the 2011 Australian Mortgage Conference heard that Australian banks were "pathetic" at innovating.
Resi home loans chief executive Lisa Montgomery said Australian lenders needed to identify different groups of consumers.
"The way we market to consumers will change," Ms Montgomery told the conference in Sydney on Thursday.
Intergenerational loans, which are handed from one generation to another, were becoming popular in parts of Japan and China where housing was unaffordable.
"In terms of where we are - we're not quite there yet," she said.
Ms Montgomery said Australia's exceptionally high rate of variable home loans was an issue for first home owners trying to access the market.
In contrast, around 50 per cent of first home owners in the UK took out fixed rate loans.
Standard and Chartered Bank Group head of distribution channels and personal banking Kelvin Lawrence told the conference that compared to Asia there was no innovation in the Australian banking sector.
"If you look at the level of innovation in Australia it's pretty pathetic," Mr Lawrence said.
Over the past 10 years there had been changes in the way home loan applications were done.
He also said there was a realisation that there were 1 billion 15 to 29 year-old in Asia whose needs were "not understood".
"The banks have no clue how to service them," he said.
The conference also heard that Indian and Chinese banks were leading the way by reaching out to Generation Y customers through mobile networks.