Nationals MP Andrew Broad
has suggested that banks waive deposit requirements from first home buyers with a positive three-year rental history.
If mortgage repayments equal what the individual is paying each month in rent, that should be enough evidence to let them borrow 100% of the loan, he told News.com.au.
“The idea came from a discussion I had with a single mum in Mildura. She has two kids and she applied for nearly 100 houses to rent and couldn’t find a place. She could have bought for the same money as renting but couldn’t save a deposit. But she told me she had been a perfect renter for years.”
It should be in the country’s best interest to ensure that people like this can reach the goal of home ownership, he said, adding that the proposal had already received a “tremendous” reaction from the public and was welcomed by those who weren’t even first home buyers themselves.
“A couple in their 70s contacted my office and said they were able to buy a house and buy a house with this sort of product – in the old days you could buy a house with a 100% mortgage. They were concerned about their grandchildren not being able to have the same standard of living as they had. It is a big issue out there.”
However, while this type of mortgage could help first home buyers overcome the hurdle of having to save for a deposit, chief executive of Mortgage Choice
, John Flavell
, said it could be too risky for the financial system.
“I understand that one of the biggest hurdles facing first home buyers is saving the deposit. That said, if Australia’s banks were to offer 100% home loans once again, they would be exposing themselves to a high level of risk,” he told News.com.au.
“In Australia, we need our banks to be strong and safe.”
The changing face of first home buyers
Young homebuyers seeking wider alternatives
FHBs increasingly locked out of property