Non-bank lender Homeloans Ltd’s launching of a new product aimed at borrowers without genuine savings as a deposit may signal a change in the lending environment, though it’s likely to be felt primarily by first home buyers, according to the lender’s general manager sales, Greg Mitchell.
The product, FlexiChoice NonGen 95, is a variation on the existing Homeloans FlexiChoice. However, while the existing product is aimed at borrowers who fall outside the typical mortgage insurer and bank lending criteria, the NonGen 95 caters to borrowers who have little in the way of a deposit, don’t have 5% genuine savings to contribute, or have an equity contribution that may be a gift, First Home Owners Grant or debt.
“[Genuine deposit savings] are always going to be relevant," Mitchell tells Australian Broker, "Banks are always wanting to see people’s capacity to service a loan. This product is only going to be available through a limited number of places - the major banks probably won’t offer it.”
The primary focus of what is, Mitchell admits, essentially a 100% loan, is getting first home buyers into the market – and in this area, he says, the concept of a minimum 5% deposit may be slightly irrelevant.