80% of homeowners favor loan flexibility: CBA

The flexibility of a mortgage loan is one of the top priorities for mortgagors, according to the Commonwealth Bank of Australia.

Nearly 80% of homeowners cited home loan flexibility, such as recalculation and multiple clearing accounts, and flexible features, including the ability to change repayments in-app or online, were key to their needs.

According to the Commonwealth Bank of Australia (CBA), there were subtle differences in home loan priorities when analyzing the needs of different generations.

Baby boomers and Gen X respondents returned similar data in terms of their top priorities.

Boomers listed a range of different flexible features as top priorities, with one in two saying the ability to redraw was crucial, and a quarter saying multiple clearing accounts were a “must have”.

Additionally, 41% of baby boomers said the general flexibility of home loans, such as the ability to streamline changes in repayments or loan types, would be an important feature when looking for a new loan.

Gen Xers also called home loan flexibility a top priority for their next loan, with two out of five repayment offers a top consideration.

Younger generations of homeowners, while listing mortgage flexibility as a top priority, also cited digital tools and the ability to easily access mortgage specialists as a priority.

For millennials, flexible features, multiple clearing accounts and redesign facilities were priorities, with two in five respondents calling them key factors. Not too different from the digital-focused Gen Z cohort, 25% of millennial homeowners also said having an app to manage home loans in one place was a key feature.

Nearly 60% of homeowners said the ability to instantly change their repayment amount through apps would make a difference, while 61% said it would make it easier for them to manage their mortgage.

The ABC’s Executive Managing Director, Home Buying, Dr Michael Baumann, said: “Often dubbed ‘digital natives’, it’s no surprise to learn that 32% of Gen Z homeowners named a one-stop-shop loan management app as a key feature for their next home loan.

“Interestingly, despite their desire for digital tools and features, this cohort also said that the support of their loan specialist was one of the factors considered when choosing a future home loan.

“It shows the continued demand for a blended experience of digital self-service and expert support and assistance.”

Dr Baumann added that it’s clear from the research that homeowners are “looking for a mortgage and a lender that can grow with them throughout their lifetime”.

“In fact, when homeowners were asked what their biggest concern was when it came to taking out a home loan, over 50% said they would be concerned if their loan was not flexible and ‘they couldn’t make changes to it because necessaryconcluded Dr. Baumann.

“This included concerns about not being able to make changes to their loan if their circumstances changed or that they would not be covered if something happened to their family and they could not make their repayments.”

BOQ Group Chief Executive George Frazis recently announced that all banks under the BOQ brand will have digital mortgages by 2024/25.

This is a continuation of the group’s digitization process, with already $1.5 billion in deposits on the group’s digital platform. BOQ intends to build and test its home loan core and creation before launching “simple” digital mortgages for new customers in 2024.

[RELATED: BOQ Group to roll out digital mortgages in 2024/25]

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