Millennials forced to put off key life events

Millennials forced to put off key life events

Australians are delaying major life events until later in life than they did a decade ago, according to Roy Morgan Research. 

An analysis of long-running trends, including moving out from the family home, living in shared housing, renting, taking out a mortgage or owning one’s home, has shown that they are all occurring at a later age. 

Aussies living at home

Age Bracket % in 2007 % in 2017
18-19 54 58
22-24 24 28
25-29 12 16

This trend of increasing amounts of young Aussies living at home has directly affected key indicators, according to a statement released by Roy Morgan Research. 

“As Australians delay moving out and put off buying a home, and getting a home loan, an increasing proportion of Australians are now renting – now the largest proportion of Australians aged 25-34.” 

This has led to more and more young Australians living in shared housing.  22-24 year olds are the largest age bracket living in shared housing, unchanged since 2007. However, this now encompasses 31 per cent of the population, compared to 26 per cent in 2007. 

No doubt, record high property prices with no signs of dropping are contributing to these results.

Death of the Mortgage 

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While 36 per cent of 25 – 29 year olds (down one percentage point since 2007) are renting, there has been an interesting increase in older age groups renting. 

“In 2007 more Australians aged 20-24 had a home loan than were renting. Now 42 per cent of 30-34 year olds are renting,” according to the Roy Morgan release. 

There are also more 35-39 year olds who are renting, increasing almost ten percentage points over the decade. 

More Australians aged 45-49 are renting (23 per cent) than own their own home (18 per cent). However, 52 per cent of this age group have a home loan, which may correlate to the recent rise in ‘rentvesting’. 

These results signify a major social shift from 2007, where 28 per cent of 45-49 year olds owned their own home and only 18 per cent were renting. 

Roy Morgan Research has also found that an increasing proportion of home buyers are now in their 40s. 

“Clearly the later in life one takes out a home loan, the later in life it will be when one comes to own the home outright,” explained Roy Morgan Research. 

“Now only 12 per cent of 40-44 year olds own their home (down from 18 per cent in 2007), and just 18 per cent of 45-49yr olds own their home (28 per cent in 2007). This trend is evident through older age groups. 

“It now takes until Australians are aged 60-64 years old, almost at retirement age, for a majority (60 per cent) to own their home whereas in 2007, 55 per cent of 55-59 year olds owned their home”. 

Why are key life events being delayed? 

Roy Morgan Research CEO Michele Levine believes that “long-term employment trends and an increasingly expensive housing market are delaying the traditional Australian dream of owning one’s own home”. 

“Important life-changing decisions are happening later in life than they used to – even compared to just a decade ago. 

“The changing shape of Australia is driven by two demographic trends – millennials are staying at school or in education longer and staying at home or in shared accommodation while they do that; Baby Boomers, rather than paying off homes as quickly as possible, are using the equity in their homes to renovate, upgrade, invest or finance whatever other activities that want to engage in. 

“The increasing price of housing relative to incomes – especially among younger Australians, is only part of the story,” said Ms Levine. 

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An IMB Bank reverse mortgage allows you to borrow against your home equity. You can draw down the loan amount as a lump sum, regular income stream, line of credit or a combination. The interest can either be fixed or variable. To understand the current rates, you can check the lender’s website.

No repayments are required as long as you live in the home. If you sell it or move to a senior living facility, the loan must be repaid in full. In some cases, this can also happen after you have died. Generally, the interest rates for reverse mortgages are higher than regular mortgage loans.

The interest is added to the loan amount and it is compounded. It means you’ll pay interest on the interest you accrue. Therefore, the longer you have the loan, the higher is the interest and the amount you’ll have to repay.

What do people do with a Macquarie Bank reverse?

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While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

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Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

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A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

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When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

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The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

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It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

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Does Australia have no-deposit home loans?

Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

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Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

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What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

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The best way to avoid mortgage stress is by factoring in a sizeable buffer of at least 2 – 3 per cent. If this then tips you over into the mortgage stress category, then it’s likely you’re taking on too much debt.

If you’re wondering if this kind of buffer is really necessary, consider this: historically, the average interest rate is around 7 per cent, so the chances of your 30 year loan spending half of its time above this rate is entirely plausible – and that’s before you’ve even factored in any of life’s emergencies such as the loss of one income or the arrival of a new family member.

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