Growing Tassie population could lead to mortgage headaches, broker warns

If brokers have clients planning to get a mortgage in Tasmania, be prepared for visa challenges, work income timing delays and ‘regional’ classification of the property affecting LVR that borrowers might not even know about, One Stone Finance broker, Jonathon Coleman, has warned.

The comments came at a time when the Tasmania government had highlighted the state’s projected population goals are on track to be exceeded.

Minister for State Development, Construction and Housing, Guy Barnett, has asked Tasmanians to ‘have their say’ as part of the government’s Refreshing Tasmania’s Population Strategy.

The government is seeking public feedback on how to continue growing the plan to grow the state’s population in a “sensible and sustainable way”. Submissions close on 5 March 2023.

The state’s population target of 650,000 by 2050 was established to support the continued economic growth the state needs to stay strong and to provide essential services, it explained.

However, it is “increasingly clear” that Tasmania will meet that target “well ahead of schedule”, thus the release of Refreshing Tasmania’s Population Strategy Consultation Paper on Wednesday (18 January).

“The latest projections from the Australian Government’s Centre for Population indicate that Tasmania will be home to 646,000 people by 2032–33, so now is an important time to refresh the Population Strategy to reflect our changing circumstances and better prepare for the future,” Mr Barnett said.

“A growing population is a key part of our plan to build Tasmania’s future as we need more working-age people to grow the economy which means more money going into our economy to help pay for the essential services Tasmanians deserve.”

He explained that the most recent data from the Australian Bureau of Statistics (ABS) showed Tasmania’s population increased by 3,608 people (0.64 per cent growth rate) to 571,517 in the year ended June 2022 and the 2021 census reported increases in the number of 20–34-year-olds choosing to live, work, and study in Tasmania.

Getting into the Tassie property market

Local Tasmanian broker, Jonathan Coleman, managing director of mortgage broking business One Stone Finance (OSF) based in Hobart, spoke exclusively to The Adviser when asked what issues brokers may face when clients are coming to live or invest in The Apple Isle.

“In terms of applying for a home loan in Tasmania, it’s really not different than anywhere else in [mainland] Oz, but the challenge comes from the individual’s circumstances when it comes to relocating and what stage they are at in the process,” Mr Coleman explained.

“We are often assisting mainland buyers and internationals entering the market. 

“A common challenge faced by our clients moving to Tas from the mainland is the timing of their employment — if they are able to work remotely, lenders are amenable to assist as income is set and ongoing.

“However if trying to obtain a loan before the relocation has happened and new work hasn’t been lined up and commenced in Tas, then lenders treat the borrowers current income as ongoing and aren’t too keen to assist.

“If you are picking up new work in Tasmania it’s always a good idea to have commenced your new job in Tas prior to applying.”

Challenges and hurdles to overcome

If merely buying a home as an investment, thus not living in it, then there’s usually no problem, but with international buyers, problems can arise with visas.

“For international buyers, we can run into issues with certain types of Visas,” Mr Coleman explained.

“Generally depending on deposit size and LVR, we can find a way to assist, but of the 40-odd lenders we have available on our panel, the available lenders for temporary residents, for example, drops to a small handful.

“Interstate borrowers also need to be aware that much of Tasmania is treated as regional and there are many category 3 and 4 areas in terms of postcodes. 

“This is not a problem for those borrowers looking to keep their borrowings under 80 per cent of the property value and out of Lenders Mortgage Insurance Territory.

“However for higher LVRs there are restrictions with many lenders when it comes to postcodes. 

“We know which lenders to ask and which ones not to ask when it comes to certain postcodes and property sizes when it comes to higher LVRs.”

Lost in translation?

Mr Coleman also commented that: “Generally, we find borrowers moving from interstate who have sold property end up with a substantial deposit to purchase in Tasmania — and this helps alleviate potential postcode issues, if someone were wanting … to live out of town on a lifestyle property. Those larger deposits help!”

Interestingly, while OSF has had clients worldwide who’ve usually been fluent in English, often documents need to be translated for a fee, which OSF advises clients of.

“Borrowers on temporary visas can also expect to pay significantly more in stamp duty if they are not permanent residents,” Mr Coleman said.

Keeping an eye on Tasmania

According to CoreLogic’s latest Mortgage Index (23 January), mortgage market activity dropped across all six states, resulting in an overall national drop of 50.4 per cent for the week ended 15 January 2023.

Tasmania and Western Australia were tied for declines, both at 49.2 per cent with index values of 30.8 and 100.2, respectively. 

For comparison, leading the states in declines was NSW, which dropped by 57.8 per cent, giving it an index value of 39.2 and Victoria closely followed with a 49.8 per cent decline and an index value of 52.3.

Additionally, recent Australian Bureau of Statistics (ABS) lending indicators’ data gave a state-by-state breakdown showing in Victoria, new loan commitments fell by 6.1 per cent; NSW (5.9 per cent); Queensland (5.1 per cent); Western Australia (5.7 per cent); ACT (16.3 per cent); South Australia (3.9 per cent); and in the Northern Territory, it dropped by 14.9 per cent.

In Tasmania, interestingly, the state bucked the trend and rose by 16.4 per cent, though the ABS explained that the Tasmania, NT, and ACT series are smaller and can have more volatile month-to-month movements.

[Related: How state governments moved on property in 2022]

Written by Fabian Cotter

Last Updated: 23 January 2023

Published: 23 January 2023