1
00:00:00,240 --> 00:00:02,200
Speaker 1: Some banks are coming to the first home buyers party.

2
00:00:02,279 --> 00:00:04,840
Speaker 1: Rules are being relaxed around borrowers using flatmates to pay

3
00:00:04,880 --> 00:00:06,800
Speaker 1: the mortgage. Right, So it used to be that you

4
00:00:06,880 --> 00:00:10,799
Speaker 1: needed sign documentation from the flatmate, but now a declaration

5
00:00:10,920 --> 00:00:14,200
Speaker 1: of intent is all that's needed now. Resident economists at

6
00:00:14,280 --> 00:00:16,880
Speaker 1: Opus Partners ed mcnighters, well us D morning to you.

7
00:00:17,840 --> 00:00:18,360
Speaker 2: Good morning.

8
00:00:18,400 --> 00:00:21,320
Speaker 1: Make I'm assuming based on the idea that really you're

9
00:00:21,320 --> 00:00:24,239
Speaker 1: not going along to try and rip off the banks

10
00:00:24,239 --> 00:00:26,599
Speaker 1: and lie to them, and that if you want a mortgage,

11
00:00:26,600 --> 00:00:28,160
Speaker 1: you'll get a mortgage, and you're desperate to pay it

12
00:00:28,200 --> 00:00:29,639
Speaker 1: and you're not going to be a fool about it.

13
00:00:30,760 --> 00:00:33,120
Speaker 2: That's genuously the case, and I think it was a

14
00:00:33,120 --> 00:00:36,120
Speaker 2: bit tough previously had to sign up a flatmate before

15
00:00:36,120 --> 00:00:38,400
Speaker 2: you even bought the flat because it's kind of a

16
00:00:38,520 --> 00:00:40,400
Speaker 2: heart before the horse kind of thing. So now just

17
00:00:40,400 --> 00:00:42,520
Speaker 2: saying hey, look, I'm planning on getting a flat mat,

18
00:00:42,840 --> 00:00:44,640
Speaker 2: I'll do it once I buy the house, I think

19
00:00:44,680 --> 00:00:47,080
Speaker 2: that makes it much easier. I did that myself when

20
00:00:47,080 --> 00:00:49,560
Speaker 2: I've bought my first home, rather than having to find

21
00:00:49,560 --> 00:00:51,200
Speaker 2: the flatmate before you actually bought the house.

22
00:00:51,520 --> 00:00:53,960
Speaker 1: Is the fragility of the arrangement A problem. I mean,

23
00:00:54,000 --> 00:00:56,120
Speaker 1: you've got the flatmate, then the flatmate moves out, and

24
00:00:56,120 --> 00:00:57,800
Speaker 1: then you've got to cover the difference between when the

25
00:00:57,800 --> 00:00:59,880
Speaker 1: old fund leaves and the new one arrives, et cetera.

26
00:01:01,240 --> 00:01:03,240
Speaker 2: Well, there's a lot of stress tests in the bank's

27
00:01:03,240 --> 00:01:06,360
Speaker 2: applications already, So if you go and get a mortgage today,

28
00:01:06,360 --> 00:01:09,240
Speaker 2: you'll probably pay about five percent intrast rate, but the

29
00:01:09,280 --> 00:01:11,800
Speaker 2: banks are going to be stress testing you on about

30
00:01:11,840 --> 00:01:15,040
Speaker 2: seven percent already. There's quite a bit of fat and

31
00:01:15,120 --> 00:01:18,880
Speaker 2: the bank's mortgage application. So just trading a few of

32
00:01:18,920 --> 00:01:20,920
Speaker 2: the rules around flatmates, I don't think it's going to

33
00:01:20,920 --> 00:01:22,240
Speaker 2: make any of the banks fall over.

34
00:01:22,480 --> 00:01:25,080
Speaker 1: Does it make a big difference when you juxtapose it

35
00:01:25,120 --> 00:01:28,560
Speaker 1: with deposits, lvrs, debt to income ratios and all of that.

36
00:01:29,840 --> 00:01:32,560
Speaker 2: It makes a difference, but perhaps not as much as

37
00:01:32,600 --> 00:01:34,840
Speaker 2: you might think. So, rather than a silver bullet to

38
00:01:34,880 --> 00:01:37,080
Speaker 2: help first home buyers get into the market, I'm calling

39
00:01:37,120 --> 00:01:39,280
Speaker 2: this more of a maybe a brass bullet or a

40
00:01:39,319 --> 00:01:43,280
Speaker 2: tin bullet. But from an income perspective, if you've got

41
00:01:43,319 --> 00:01:45,960
Speaker 2: a flat mat in for two hundred bucks a week,

42
00:01:46,360 --> 00:01:48,840
Speaker 2: it's about an extra one hundred and thirty thousand dollars

43
00:01:48,920 --> 00:01:52,240
Speaker 2: worth of lending. Now, that's only from an income perspective.

44
00:01:52,280 --> 00:01:54,600
Speaker 2: And the reason I call it a brass bullet is

45
00:01:54,640 --> 00:01:58,120
Speaker 2: because usually it's deposit that holds first home buyers back.

46
00:01:58,400 --> 00:02:00,760
Speaker 2: When we look at first home buyers debt to income

47
00:02:00,840 --> 00:02:05,480
Speaker 2: ratios compared to owner occupiers, like other second home third

48
00:02:05,480 --> 00:02:07,960
Speaker 2: home buyers who are upgrading to bigger and bigger houses,

49
00:02:08,200 --> 00:02:11,760
Speaker 2: those people actually take on more debt compared to their incomes.

50
00:02:11,919 --> 00:02:14,440
Speaker 2: The first home buyers, it's the deposit holding them back.

51
00:02:14,840 --> 00:02:17,040
Speaker 1: Okay, how much of this driver is driving business for

52
00:02:17,080 --> 00:02:18,760
Speaker 1: the banks? In other words, they're saying, right, this is

53
00:02:18,760 --> 00:02:20,680
Speaker 1: an avenue for us in time that we can get

54
00:02:20,680 --> 00:02:21,680
Speaker 1: a bit of business through the door.

55
00:02:22,520 --> 00:02:24,720
Speaker 2: Well, this is a part of a general trend where

56
00:02:24,720 --> 00:02:26,799
Speaker 2: banks are competing on policy, and I think it's a

57
00:02:26,919 --> 00:02:29,959
Speaker 2: very good thing. Which is basically, if an z has

58
00:02:30,000 --> 00:02:33,119
Speaker 2: such tight criteria that you can't get a mortgage through them,

59
00:02:33,320 --> 00:02:35,680
Speaker 2: but asb have loosened some things and you can actually

60
00:02:35,680 --> 00:02:38,720
Speaker 2: get a mortgage through them, well it doesn't matter who's

61
00:02:38,720 --> 00:02:41,040
Speaker 2: got the higher interest rate. If you're a first home buyer,

62
00:02:41,120 --> 00:02:43,840
Speaker 2: you're going to the bank that's actually going to give

63
00:02:43,880 --> 00:02:45,840
Speaker 2: you the mortgage. So I think this is a good thing.

64
00:02:45,919 --> 00:02:48,280
Speaker 2: We've also seen a little change in terms of interest

65
00:02:48,440 --> 00:02:51,400
Speaker 2: only mortgages out of am Z as well, so that's

66
00:02:51,440 --> 00:02:54,400
Speaker 2: going to be very good for investors. But this is

67
00:02:54,440 --> 00:02:56,799
Speaker 2: a trend we're seeing where banks are saying, other than

68
00:02:56,919 --> 00:02:59,280
Speaker 2: just dropping interest rates, what else can we do to

69
00:02:59,320 --> 00:03:01,240
Speaker 2: become the third bank for borrowers?

70
00:03:01,400 --> 00:03:03,280
Speaker 1: What you read on the economic the moment are be

71
00:03:03,440 --> 00:03:05,519
Speaker 1: next week? On the cash rights are twenty five points?

72
00:03:05,520 --> 00:03:06,919
Speaker 1: What have you got neutral?

73
00:03:07,000 --> 00:03:11,640
Speaker 2: At neutral? Two point seventy five percent? Is I think

74
00:03:11,720 --> 00:03:13,600
Speaker 2: where we're going to end up if I had to

75
00:03:13,600 --> 00:03:14,880
Speaker 2: take a guest for your mic.

76
00:03:14,880 --> 00:03:17,680
Speaker 1: And is it bullish? Out there? Are people wanting money.

77
00:03:19,520 --> 00:03:22,520
Speaker 2: We're seeing a slow recovery. About seventy four thousand houses

78
00:03:22,520 --> 00:03:25,160
Speaker 2: sold over the last year. We're talking about the housing market.

79
00:03:25,400 --> 00:03:29,519
Speaker 2: We bottomed outed about fifty six thousand houses, so you

80
00:03:29,560 --> 00:03:32,120
Speaker 2: know there's an extra eighteen thousand houses selling compared to

81
00:03:32,120 --> 00:03:34,400
Speaker 2: the bottom of the market in twenty twenty three. But

82
00:03:34,480 --> 00:03:36,440
Speaker 2: it's a slow recovery. I think that's the same for

83
00:03:36,480 --> 00:03:38,600
Speaker 2: the whole of the economy. You're probably hearing it from

84
00:03:38,600 --> 00:03:41,840
Speaker 2: people yourself where people are nervous, and I think it's

85
00:03:41,840 --> 00:03:44,560
Speaker 2: the uncertainty that kills people. I was giving an economics

86
00:03:44,560 --> 00:03:48,800
Speaker 2: presentation to a board of a large industry organization and

87
00:03:48,840 --> 00:03:51,160
Speaker 2: they said to me, Ed, it has never felt so

88
00:03:51,520 --> 00:03:54,880
Speaker 2: uncertain at the moment. How do we decide whether to

89
00:03:55,040 --> 00:03:58,000
Speaker 2: invest and grow our organization or not when we don't

90
00:03:58,040 --> 00:03:59,960
Speaker 2: know what's going to happen next week? When the Reserve

91
00:04:00,120 --> 00:04:02,080
Speaker 2: think makes the announcements not.

92
00:04:02,120 --> 00:04:05,160
Speaker 1: A bad question. It appreciated of Ed McKnight, who's resident

93
00:04:05,200 --> 00:04:06,720
Speaker 1: economists and Opus Partners.

94
00:04:07,160 --> 00:04:10,080
Speaker 2: For more from The Mic Asking Breakfast, listen live to

95
00:04:10,200 --> 00:04:13,240
Speaker 2: news talks. It'd be from six am weekdays, or follow

96
00:04:13,280 --> 00:04:14,880
Speaker 2: the podcast on iHeartRadio