First timers seek 100pc loans
As many as one in four borrowers are looking for 100 per cent home loans, according to mortgage broker Loan Market.
Dean Rushton, Loan Market CEO said 25 per cent of the brokerage’s total enquiries this month had come from people wanting no deposit home loans, despite such products having been long consigned to the “mortgage museum”.
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“There remains strong interest in people looking to enter the property market via borrowing the whole cost of the property,” Mr Rushton said.
“But lending restrictions which require genuine savings contributions of around five per cent towards the property purchase means these people are not going to get a loan.
Mr Rushton said St George and Bank SA were however accepting rent payments as a form of savings for a home deposit if there was evidence of at least 12 months’ continuous rental history and the property is leased through a licensed property manager.
“This is a significant breakthrough for first home buyers and a move which could be a major boost to the home finance industry,” Mr Rushton said.
Mr Rushton said family equity options were also still available to help first home buyers needing a home loan deposit.
“Under the family equity guarantor’s support policy, parents or another immediate family member or even a friend can help with loan servicing and security support,” he said.
Would-be buyers would be best placed to develop a savings plan early in order to build a home deposit, Mr Rushton urged.
“What we are telling would-be buyers is to set up a savings plan where they initially aim to put away just a small amount each week,” he said.
“The discipline of saving is no different from meeting a fortnightly or monthly mortgage payment.”