Introduction
 
Mortgage Products for Australian First Time Buyers 2005 is Datamonitor's latest report on the Australian mortgage market. It examines the marginalization of first time buyers, what lenders are doing to target first time buyers and what more can be done. In doing the latter the report considers strategies from overseas and presents their applicability to the Australian market.
 

 
Scope
 
Covers products for first time buyers in Australia with comparison to products in the UK
 
Includes an estimate of lending commitments to first time buyers to 2008
 
Based on in-depth interviews with mortgage executives
 
Highlights
 
In the second half of 2004 first time buyers' share of the mortgage market increased driven by stamp duty concessions, slowing property price increases and consequently relaxed affordability constraints. In October 2004, the latest month for which data is available, first time buyers accounted for 16.0 per cent of loans advanced.
 

 
Slowing property prices will inevitably bring first time buyers back into the property market as affordability constraints relax. This is not to say, however, that lenders cannot play a role in facilitating, and consequently speeding, their return.
 

 
Datamonitor believes that providers of shared equity products will have to work hard to build consumer confidence in the notion of sharing equity. Equity sharing is a new concept in Australia and many consumers will be uncomfortable with the notion of handing the lender up to 50 per cent of their equity gain.
 

 
Reasons to Purchase
 
Examine the current provision for first time buyers in the Australian mortgage market
 
Learn from innovators in the first time buyer segment
 
Gain Datamonitor's forecast of lending commitments to first time buyers to 2008

TABLE OF CONTENTS
 
INTRODUCTION 6
 
Scope 6
 
Who is the target reader? 6
 
How to use this report 7
 
BACKGROUND 8
 
The buoyancy of the property market 8
 
Australian property prices have rocketed 8
 
The strength of the investment property market has been a driver of the market as a whole 9
 
The marginalization of first time buyers 11
 
First time buyers accounted for less than 15 per cent of owner occupied properties purchased in 2003 11
 
Government aid for first time buyers 22
 
The First Home Owner Grant: means tests should be introduced 23
 
Stamp duty concessions have been introduced to aid first time buyers 23
 
A problem to be solved by various stakeholders 25
 
PRODUCTS FOR FIRST TIME BUYERS 27
 
Products based on family support 27
 
St George Family Pledge product 27
 
Commonwealth Bank Family Equity Loan 28
 
HomeStart Family Assist 29
 
These products have received a mixed reception 29
 
Examples from the UK 30
 
Shared equity products 34
 
The Wizard Head Start Shared Equity Loan 34
 
Examples from the UK 36
 
Other products appealing to first time buyers 41
 
Preferential rate loans 41
 
100 per cent loans 42
 
Directed savings accounts 44
 
THE FUTURE DECODED 45
 
Forecasting lending commitments to first time buyers 45
 
Lending commitments to first time buyers will amount to AUS$25.7 billion in 2008 46
 
Catering for first time buyers 48
 
APPENDIX 50
 
Definitions 50
 
Research methodology 50
 
Future readings 51
 
Relevant links 52
 
Datamonitor’s custom research capabilities 52
 
SPP writing team 54
 
How to contact experts in your industry 54