FHB need leg-up: Loan Market Group

FHB need leg-up: Loan Market Group

18 May 2010 by Staff Reporter 0 comments

Loan Market Group is calling on the banks to recognise rent as evidence of 'genuine savings'.

According to the brokerage, if borrowers could use rental payments as evidence of genuine savings, more first home buyers would be able to enter the property market.

First home buyer activity has taken a hit since the expanded government grant scheme finished in December 2009.

Loan Market chief operating officer Dean Rushton said enquiries from first time buyers were down more than 40 per cent from a year ago, and are currently approaching all-time lows.

Mr Rushton said first home buyers were struggling to save for a home deposit as rental payment increase.

“Australian lenders require a percentage of the purchase price - normally five per cent - to be saved for all loans but it is extremely difficult for people paying the exorbitant rents customary these days to save money,” he said.

“But if rental payments were taken into consideration as a factor in assessing genuine savings that would enable many people to pursue the dream of home ownership.

“In many cases people in metropolitan areas are paying more in rental repayments than they would if they were paying off a home loan.”

Mr Rushton welcomed changes to the federal government’s First Home Saver Account program announced in the Budget which will allow for faster access to the account when purchasing a home.

“This is a good move but more needs to be done to help first home owners,” he said.

While the RBA has lifted official interest rates from a near record low of 3.0 per cent to 4.5 per cent since last October, a recent survey of Loan Market brokers found interest rates were not the worst enemy of the first time buyer.

“Unfortunately, no lender recognises ongoing rent payments as a component of genuine savings,” Mr Rushton said.

“Some relaxation of this requirement would be a major step forward.”

Loan Market Group is calling on the banks to recognise rent as evidence of 'genuine savings'.

According to the brokerage, if borrowers could use rental payments as evidence of genuine savings, more first home buyers would be able to enter the property market.

First home buyer activity has taken a hit since the expanded government grant scheme finished in December 2009.

Loan Market chief operating officer Dean Rushton said enquiries from first time buyers were down more than 40 per cent from a year ago, and are currently approaching all-time lows.

Mr Rushton said first home buyers were struggling to save for a home deposit as rental payment increase.

“Australian lenders require a percentage of the purchase price - normally five per cent - to be saved for all loans but it is extremely difficult for people paying the exorbitant rents customary these days to save money,” he said.

“But if rental payments were taken into consideration as a factor in assessing genuine savings that would enable many people to pursue the dream of home ownership.

“In many cases people in metropolitan areas are paying more in rental repayments than they would if they were paying off a home loan.”

Mr Rushton welcomed changes to the federal government’s First Home Saver Account program announced in the Budget which will allow for faster access to the account when purchasing a home.

“This is a good move but more needs to be done to help first home owners,” he said.

While the RBA has lifted official interest rates from a near record low of 3.0 per cent to 4.5 per cent since last October, a recent survey of Loan Market brokers found interest rates were not the worst enemy of the first time buyer.

“Unfortunately, no lender recognises ongoing rent payments as a component of genuine savings,” Mr Rushton said.

“Some relaxation of this requirement would be a major step forward.”

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
REVEALED: The 10 best agents in Australia for 2017

For the first time ever, the top 10 agents in the REB Top 100 Agents ranking are revealed in this exclusive podcast. ...

View all podcasts

Are dodgy agents being punished enough?

Yes (8.6%)
No (55%)
Only in some states (2.3%)
Not all dodgy agents are being found out (34.1%)

Total votes: 220
The voting for this poll has ended on: April 15, 2017
Do you have an industry update?