Legal professionals are purchasing their first home three years earlier than the average Australian but are now facing higher monthly mortgage repayments due to rising interest rates, a new report has found.
In a report titled ‘Unveiling the Legal Advantage’, mortgage broking firm Legal Home Loans consider the lending trends among Australian legal professionals.
General Manager of Legal Home Loans Aylin Unsal said, “It is very exciting to be sharing exclusive home loan insights specific to legal professionals for the first time”.
“It is encouraging to see that legal professionals are continuing to seize the opportunities before them despite challenging market conditions such as interest rate hikes and high inflation,” said Unsal.
“However, as suggested by the data, there may be untapped potential for lawyers to enter the property market sooner, grow their portfolios, and ultimately enhance their wealth and financial security further.”
The report analysed data from 610 Legal Home Loan records, encompassing 776 applicants, between January 2022 to January 2023.
To ensure comprehensive representation, the information was cross-referenced with the National Profile of Solicitors 2022. The survey had roughly equal gender distribution and included PAYG solicitors, barristers, students, self-employed solicitors, and partners. The sample was predominantly situated in NSW and data was kept anonymous to maintain privacy.
The data reveals an average borrower age of 38 years, indicating that legal professionals are entering the property market at a relatively young age.
However, they are now facing higher monthly repayments on their mortgage, with an average increase of $1,100 compared with the previous year.
Additionally, average loan sizes have increased by approximately $28,000, debunking the media hype that property prices were falling in 2022.
The majority of loans were attributed to property purchases in 2022, with 35 per cent representing first-time home acquisitions by legal professionals. This figure surpasses the national average of 25 per cent, demonstrating the legal profession’s heightened ability to acquire property despite rising interest rates. Factors such as job security and benefits play an important part in influencing this behaviour.
The report considered whether legal professionals could be entering the property market earlier. Nearly 20 per cent of legal professionals purchased properties with a loan-to-value ratio under 80 per cent, leaving room to leverage their position in the lending and property market.
By opting for a 10 per cent deposit and avoiding lenders’ mortgage insurance, lawyers could expedite their entry into the property market and become first-time homeowners five years earlier.
You can find the full report here.