This spring shopping season is going digital
Around 90 percent of CommBank’s real estate transactions are now processed online, and the use of DigiDocs – a new process that replaces paper contracts – has increased by 2,000 percent since July 2020.
Customers are increasingly interacting with their home loan through digital tools. Around 340,000 CBA customers check their home loan balances or interact an average of 26 times a month with the content and tools of the “Manage my loan” function in NetBank, which is 13 percent more than last year.
Since the tool was launched in April 2021, the bank has also seen that around 5,000 customers have used their digital splitting tool to split, convert and freeze their home loan.
To counteract this change in customer behavior, the Commonwealth Bank has launched a new Home Buying Hub in the CommBank app. The hub helps guide customers digitally through every step of the home buying process, making the complex feel simple and straightforward. In just a few weeks since it was launched, around 3,000 customers have used the hub, with around one in five customers speaking again several times.
The hub provides customers with easy access to lender details and pre-approval letters, and also alerts customers when their conditional approval is about to expire. In addition, the hub offers a number of checklists to support customers throughout their purchasing process; including determining the acquisition costs in advance, hiring a lawyer or transport company and organizing a property inspection.
Return of the investor
Ideal conditions, including the current low interest rate environment, will see investors return this spring buying season.
The percentage of investor mortgage approvals rose to 29.4 percent in July this year, down from 23.0 percent in October 2020. Growth in the investor system rose 2.9 percent over the past 12 months from -0.6 percent in July 2020 to + 2.3 percent in July 2021.
“The current low interest rate environment is attractive to investors looking for a higher return on their investments. The massive government stimulus for the economy in the last 12-18 months will also encourage some investors who are afraid of inflation to invest in real estate, which will further increase the investor mix of new registrations, ”said Michael Baumann.
While the first home buyers got off to a strong start in the first half of the last financial year and peaked at 18 percent in December 2020, the proportion of first-time home buyers fell to 12 percent at the end of the year. Looking ahead, first-time home buyers face the challenge of rising house prices, with house prices rising 18 percent in the last 12 months and showing no signs of slower growth.
“At the start of the spring buying season, first-time home buyers face affordability issues. However, the availability of space through government homebuyer programs will alleviate some of that stress.
“Commonwealth Bank is one of only two major lenders offering loans under the Government’s First Home Loan Deposit Scheme, New Home Guarantee, and Family Home Guarantee to customers applying for the First Home Loan Deposit Scheme.
“We are pleased that buyers still have some remaining spaces under the family home guarantee and the guarantee for a new home, and we recommend that our customers contact their lender or broker for an application,” commented Dr. Baumann.
Tips for first time buyers
- Understand and budget your up-front costs – in addition to your down payment, there are other costs you need to consider, including stamp taxes, bank charges, inspections, brokerage fees, and legal fees.
- Take into account the different sales processes – there are different ways to buy a property. Therefore, it is important that you ask your lender or broker how you should prepare for an auction versus a private sale.
- It’s not just about the rate – spend time understanding the characteristics of the various home loans to see if it is right for you. For example, CommBank offers building finance customers an extremely affordable green loan to finance improvements such as solar panels or a battery. This exclusive feature can help save electricity costs and reduce your environmental impact.
- Conditional approval is just that – it’s important to remember that conditional approval can help you locate and track real estate with some confidence, but it’s just an indication of what the bank can lend you, and that Final offer depends on a series of final checks.
- Find a lawyer or an intermediary – they will help you with the contract and other legal documents. Ask your lender or broker about Home-In, CBA’s digital brokerage tool that will help you coordinate all the steps and communication between your attorney and lender.
- Inspect – Make sure you do a thorough inspection of a property and the surrounding area, including viewing it at different times of the day. Use online views and tools to help you overcome COVID-19 restrictions. Finally, you should definitely visit the property you have purchased before you settle in order to avoid surprises.