Signs of opportunism amongst first home buyers

The latest DBM Atlas data has revealed that renters are driving an overall increase in consumer willingness to take up new loans, as both business and consumer sentiment improves.

While the pandemic has had far-reaching impacts on employment, many renters have managed to grow their savings during the lockdown period – with more than 1 in 5 now planning to capitalise on a property sector under pressure by taking out a home loan. The latest DBM Atlas data also suggests consumers are now less likely refinance, with just 8% looking to pay out or replace their current loans.

Consumer and business sentiment rebounded in May, with many Australians starting to see light at the end of the tunnel.

Insight #1: Consumer and business sentiment has partially recovered from historic lows, but remains fragile

With many lockdown restrictions easing and the share market rallying, consumer and business sentiment saw a partial recovery in May. Sentiment lifted in all states and most industry sectors – with notable exceptions being Accommodation & Food Services and Rental, Hiring & Real Estate Services. While businesses indicate increased optimism about future conditions, the general sentiment toward current conditions showed little improvement.

Implications:

DBM CEO Kipling Zubevich said of the uplift in sentiment: “Although confidence has improved, there is still a long road ahead. There are many uncertainties around the timing of the recovery, and as we have seen in Victoria over recent days it will sometimes be a case of “two steps forward, one step back”.

He continued: “Affected consumers and businesses will continue to look to financial providers for support – particularly in relation to managing cashflows (i.e. repayment pauses, short-term lending to re-stock or re-engage staff…). It will remain critically important for financial providers to communicate their support offering as many Australian workers and businesses face various challenges over the months ahead”.

Insight #2: First home buyers may represent the main source of home lending growth over the coming months

For many renters that have remained employed, living expenses have decreased during lockdown – with less requirement to commute, and fewer leisure or entertainment options.  Armed with a bigger deposit, prospective first home buyers are monitoring property prices keenly in the hope that 2020 might represent their best chance to enter the market. Meanwhile, intention to pay off existing loans (and / or refinance) is declining, which suggests some borrowers are less confident they will be approved for new lending in the current climate.

Implications:

Mr Zubevich said of these findings: “The higher consideration of home loans among renters comes from a combination of factors – cautious spending habits coupled with enforced savings have put them in a better financial position than they expected, and they are likely to view declines in property prices as the opportunity they have been waiting for.”

He continued: “First home buyers tend to need more advice and support than “upgraders” or investors, so home lenders will need to demonstrate that they are willing to help. Lenders must be on their toes, however, with the employment outlook differing considerably across industries.”

About The Data

Business and consumer data was collected from the DBM Atlas research program – the largest ongoing survey of Australian consumers and businesses, collecting over 80,000 responses annually on customers’ experiences with their banking, insurance, credit card, superannuation and wealth management institutions.

About DBM Consultants

DBM works with over 40 financial brands including Australia’s biggest, our research and data-empowered consulting philosophy is relied upon to benchmark the performance of Australia’s most successful organisations. DBM has a rich record of experience and expertise in consumer and business services across many industries, while specialising in financial services with the power of DBM Atlas – Australia’s most comprehensive financial services customer dataset.

The advisory power of DBM Atlas is delivered via our team of financial sector, CX, consumer insight, data science and analytics consultants.

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