First home buyers desperate to get on to the property ladder are increasingly asking brokers to find them a 100 per cent home loan.
Recent data from Loan Market Group found that 25 per cent of the brokerage’s total enquiries this month have come from buyers wanting no deposit home loans.
But despite growing enquiries for such products, Loan Market’s chief operating officer Dean Rushton said this type of mortgage has long been consigned to the lending museum and Australians are not likely to see this type of loan again.
Mr Rushton said a typical misconception about some advertised 100 per cent loans is that lenders will lend consumers the money without any extended conditions or costs.
“Many loans which are promoted as ‘no deposit’ or ‘100 per cent’ will often require fees and contributions in the form of Lenders Mortgage Insurance,” he said.
Mr Rushton said St George and Bank SA are 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.
“It could enable more people to break the rental cycle and realise the dream of property ownership if more lenders accepted rent as genuine savings.”
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.