Mortgage Arrears | An Expanding Universe

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Mortgage Arrears An Expanding Universe
Westpac believes that, the potential of the
Self-Managed Super Fund market is clearly very
significant as Superannuation in this country is
worth about 1.3trn, of which about a third sits
in SMSFs.
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With the expectation to double in size over the
next 10 years, so by 2022 we are looking at about
800bn in assets it's very, very significant.
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Looking at the raw figures, it is not surprising
that lenders have been falling over themselves to
launch into the SMSF market as they try to
balance their Mortgage loans portfolio, as this
will lower the proportion of Loans with Mortgage
Arrears.
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As this will also remove any Mortgage from the
Individuals Assets Liabilities reports, this
could assist with any clients who may require
Debt Consolidation.
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Lenders over the last two years have instigated a
myriad of Investment Loan products, as they are
encouraged by the Australian Taxation Office
clarifying its stance on these funds.
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The result is a fast-expanding universe , one in
which brokers could have a central role as SMSFs
have become much more mainstream among
superannuation clients due to the Trustees
looking for diversified investments, and there
has been a very strong penchant for property in
this country.
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There are about 900,000 Australians who are
members of an SMSF and it has certainly become
more mainstream with the acronym being now better
understood and it is a taste that is being
propelled further by the lackluster performance
of share markets.
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With flat interest rates and equities flat as
well, people are looking to other asset classes
to invest their money into for long-term
investments, and good returns out of property
have been demonstrated in the past.
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The products fit with a long-term preference for
property among Australian investors as Property
has long been a cornerstone of retirement
strategies.
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People take comfort in bricks and mortar, an
asset that they can see and touch. Property is
something that people are comfortable with, and
since borrowing to invest through super was
introduced, a whole new way of investing in
property for retirement has become available.
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The two key emotional drivers are control and
flexibility as you've got clients who want to
take greater control of their retirement savings
and they are also looking for greater flexibility
of what they have to invest into.
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In terms of the origination process itself, there
is a little bit more rigour and compliance around
it, but the process is by and large the same as
borrowing money for any other investment property
lending and Lenders certainly want to understand
who they we are lending money to, and how the
money will be paid back.
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The most important thing is knowing where the
line is in the delineation between advice, and
the knowing customers have spoken to their
financial planner ,their accountant and Finance
Broker to ensure that an SMSF and the product on
offer, is most appropriate for them, so they are
able to provide clients with best-in-class
service.
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The ever changing Landscape needs potential
clients to research extensively the potential for
this solution which has great potential benefits.
Extract from the Australian Broker Magazine
September 2012 edition