An Expanding Universe | Mortgage Arrears

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An Expanding Universe Mortgage Arrears
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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.   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.   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.   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 main stream with the acronym being now
better understood and it is a taste that is being
propelled further by the lackluster performance
of share markets.   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.   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.   In terms of
the origination process itself, there is a little
bit more rig our 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.   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
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Phone [phone] www.fundsnational.com.au