Over 70% of First Home Buyers are buying homes with a higher than 85% loan to value ratio, according to a new study.
73% of First Home Buyers surveyed by LMI provider Genworth said that they were ready to enter the market with a deposit lower than 20% of the value of the property and 56% saying that they would go even lower than that.
91% of respondents said that they expected house prices to keep growing in 2022, with two thirds saying that this was still a good time to buy a home in Australia.
“The research revealed that demand among First Home Buyers is being fuelled by a combination of low interest rates, expected further property price gains and for many, a fear of missing out,” said Genworth CEO, Pauline Blight-Johnston.
“The dream of homeownership is alive and well, however, many First Home Buyers are having to change their strategies given the trajectory of house prices. We are seeing First Home Buyers targeting a lower deposit level, different property types and more affordable properties outside major metropolitan areas.”
Brokers still need to be there to help First Home Buyers, said Blight-Johnston.
“It’s clear that First Home Buyers still require support to navigate the lending market, in particular establishing borrowing capacity, loan pre-approvals and finding the right loan,” she said.
“This is why almost nine in 10 First Home Buyers agree mortgage brokers provide valuable support and help to cut through the complexity of buying a home.”
“With property prices continuing to surge, it is inevitable that First Home Buyers’ ability to save for a 20% deposit will become more challenging and that LMI will remain an important option for entering the housing market sooner.”
“The recent focus on responsible lending and insurance in our industry is both timely and critical to ensure First Home Buyers can both buy and remain in their homes sustainably.”
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