Australian Property News
Defaults can kill home purchase plans
Posted on Wednesday, March 03 2010 at 4:41 PM
Young Australians put their dreams of buying property at risk if they skip payments on telecommunications and utilities bills, according to Mortgage Choice chief executive Michael Russell says.
Many people don't realise the lasting impact a default or two on a standard monthly bill can have on their credit rating, Russell says.
While borrowers with less-than-stellar credit histories may once have been able to turn to secondary lenders for finance approval, these days it's very difficult to obtain a home loan if you have a poor credit rating, he adds.
"If you've got a blemish on your credit report, forget about it," Russell says.
Meanwhile, in positive news for borrowers, Russell says competition is coming back into the home loan market.
The big four banks' share of Mortgage Choice loans peaked at 75 per cent in the second quarter of 2009, and fell to 57 per cent in the first quarter of 2010.
Second-tier banks, in particular, have reclaimed market share lost during the global financial crisis, Russell says.
He notes that the presence of second-tier lenders in the marketplace is essential to competition.
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