Australians aged 50 years and over are driving growth in the house-loan market as they re-borrow against their house to fund investments, according to the National.
Research, conducted by Roy Morgan, shows that between 1996 and 2000 house loans issued to Australians aged 50-plus years increased 54%, five times the growth in the number of loans to borrowers of all age groups.
The research shows that, on current trends, the number of loans to those aged 50 or more will soon overtake loans to borrowers under 34 years of age.
The National's general manager of personal financial services, Ken Hodgson, says the residential-loan market is literally turning upside down.
"Home buyers aged 35 to 49 are still the major market, but demand is rising slowly in this group. Customers under 35 are borrowing less often, which means those aged 50-plus are really driving market growth," he says.
"Typically, customers in this age group are re-borrowing to fund investments. Gearing has become an active part of their wealth-creation strategies to boost savings.
"We are also seeing many customers in this age group borrowing to finance traditional owner-occupied home purchases."
This shift, added Hodgson, will force many lenders to rethink their attitudes to lending to people who are approaching retirement.
"We lend over terms of up to 25 years to customers of any age, provided we can be assured they will have an income over the life of the loan.
"As Australians live and work longer, we are seeing the ages of home loan customers increasing," he says.
Hodgson says the research also shows younger Australians are postponing the dream of buying their own house.
The number of house loans by all lenders to Australians aged 18 to 34 years decreased 9.4% between 1996 and 2000, in sharp contrast to the 10.2% increase in loans to borrowers of all ages over the same five-year period.
"The figure highlights a number of social and economic trends. In particular, young Australians seem to stay at home longer with their parents, which has slowed the formation of new households. There is also some evidence of a shift towards renting rather than buying," he says.
"It is clear, however, the great Australian dream of buying your own home is being postponed by an increasing number of young Australians, despite record low interest rates and a high level of housing affordability.
"Having said that, we have recently seen a reversal of this trend because of the government's first home buyers grant."