The home loans of the future

The home loans of the future

Borrowing money to buy your own home could look very different in coming years, predicts a report from the Commonwealth Bank’s Future Home Insights Series.

With the population of Australia predicted to swell to 30 million, and one in five Australians to be over the age of 65, the nation is looking at a housing market that will be under greater and more diverse pressures.

Michael Workman, Senior Economist at the Commonwealth Bank said that these factors and other economic and cultural trends will significantly influence the housing market as we know it. 

“Whether you are looking to buy your first home, or make a new investment purchase, understanding future market trends can help you make a more informed decision about where, what and when to buy,” said Workman.

Given that these factors will all affect who can afford their own home and how they can do it, the Commonwealth Bank has predicted eight new home ownership trends that are likely to emerge in the future or continue a rise in popularity.

Collaborative buying

Under a collaborative buying scheme, co-housers would buy or rent a small dwelling inside a larger development and share some communal areas with other residents. These developments would be efficient in their use of space and resources, reducing the overall environmental impact of each inhabitant.

Group loans

Group loans are already a popular way for buyers who are unable to borrow enough for a home by themselves to get into the property market. By partnering with a trusted family member or sibling, individuals can increase their borrowing power and share the burden of repayments to get into their own home.

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Communities in common

With the average size of the Australian home set to continue shrinking, the report predicts that Australians will live in smaller dwellings and share more common spaces with like-minded individuals in their area.

Joint-ventures and syndicates

New development being made. Shows backs of houses and dirt area where a road or more houses will go.

With the price of owning a home as an individual becoming further out of reach in the future, groups pooling funds to buy into the property market is likely to become more popular. This could include group development models where land is purchased as a group and several homes are commissioned to be built in the area, reducing and sharing the cost of the venture.

Guarantor loans

Already the go-to option for many Australians whose parents are able to help them secure a loan, the rise of the guarantor loan is set to continue in future. While it does involve risks for the person whose property the loan is secured against, the report suggests that it will continue to be a popular way for the younger generation to get into their own home.

Crowd housing

Crowd housing is an online trend where buyers, property developers and architects connect in real time to discuss the types of property they would like to be built. This interaction could prove invaluable to developers, who want to make sure their new developments will sell, and buyers who have a specific vision for the type of property they wish to own.


Modelled on a scheme run by the UK government, the report predicts that Australia could see its own version of staircasing implemented in the future. Staircasing is a shared ownership scheme that involves a buyer purchasing up to 25 per cent of the value of a property and then slowly paying the remaining value off. It is seen as a potential way to assist home buyers but has left some people sceptical as to how it could work in cities such as Sydney and Melbourne – where first home buyers would be hard pressed to come up with 25 per cent of the average home’s value.


stunning spare berdoom in modern australian mansion

Finally, the report predicts the continuing monetisation of spare bedrooms and couches through the sharing economy. Sites such as AirBnb help owners to promote their properties as short term rentals to release the value of these spare living spaces.  

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Home loans spanning 40 years are offered by select lenders, though the loan period is much longer than a standard 30-year home loan. You're more likely to find a maximum of 35 years, such as is the case with Teacher’s Mutual Bank

Currently, 40 year home loan lenders in Australia include AlphaBeta Money, BCU, G&C Mutual Bank, Pepper, and Sydney Mutual Bank.

Even though these lengthier loans 35 to 40 year loans do exist on the market, they are not overwhelmingly popular, as the extra interest you pay compared to a 30-year loan can be over $100,000 or more.

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Also known as the comparison rate, or sometimes the ‘true rate’ of a loan, the average annual percentage rate (AAPR) is used to indicate the overall cost of a loan after considering all the fees, charges and other factors, such as introductory offers and honeymoon rates.

The AAPR is calculated based on a standardised loan amount and loan term, and doesn’t include any extra non-standard charges.

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

What does going guarantor' mean?

Going guarantor means a person offers up the equity in their home as security for your loan. This is a serious commitment which can have major repercussions if the person is not able to make their repayments and defaults on their loan. In this scenario, the bank will legally be able to the guarantor until the debt is settled.

Not everyone can be a guarantor. Lenders will generally only allow immediate family members to act as a guarantor but this can sometimes be stretched to include extended family depending on the circumstances.

How does a redraw facility work?

A redraw facility attached to your loan allows you to borrow back any additional repayments that you have already paid on your loan. This can be a beneficial feature because, by paying down the principal with additional repayments, you will be charged less interest. However you will still be able to access the extra money when needed.

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What is a building in course of erection loan?

Also known as a construction home loan, a building in course of erection (BICOE) loan loan allows you to draw down funds as a building project advances in order to pay the builders. This option is available on selected variable rate loans.

What is appraised value?

An estimation of a property’s value before beginning the mortgage approval process. An appraiser (or valuer) is an expert who estimates the value of a property. The lender generally selects the appraiser or valuer before sanctioning the loan.

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Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

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