Enquiries for no deposit home loans have increased almost 30 per cent since the start of the year, new research has found.
According to data from Experian Hitwise, there has been a 28 per cent rise in searches containing “no deposit loans” since January 1, 2011, while no deposit searches this month were up 57 per cent.
“First home buyers are looking to get into the property market but many are trying to do so by borrowing the whole cost of the property,” Loan Market Group’s chief operating officer Dean Rushton said.
“However 100 per cent home loans were justifiably the first products to go with the GFC and those enquiring about this product will not get a loan.
“Lending restrictions which require genuine savings contributions of around five per cent towards the property purchase means these people are just going to have to work on building up their home loan deposit.”
Mr Rushton said would-be buyers were best off to develop a savings plan early to build a home loan deposit.
“The federal government’s first home saver scheme has had little traction so it’s up to borrowers to take the initiative,” he said.
“There have been encouraging signs that this is occurring but it has yet to flow through into first home buyer activity.