Customer-owned lender CUA has loosened lending policies relating to apartment purchases, in a bid to help first home buyers onto the property ladder.
“We’ve reviewed our lending policy so that we can provide additional financial options to our members in what is a popular and growing segment of Australia's property market,” CUA general manager of sales, Andy Rigg said.
“Many people looking to purchase an apartment are first home buyers and we know how hard it can be for them to save for a deposit and get a foot in the door of the property market.”
CUA has amended the definition of “high density apartment” to apply only to apartments in buildings of six or more floors, or more than 50 apartments. This is up from four floors and 30 apartments previously.
The lender said this means borrowers purchasing an apartment in buildings of less than six floors, or less than 50 apartments, will be subject to the same criteria as those purchasing a house and won’t need to meet the tougher high density apartment lending criteria.
More first home buyers will now able to purchase an existing apartment for owner occupied purposes, with the maximum LVR increased by an extra 10%, to 90% (or 85% for a new unit) with lenders mortgage insurance.
Finally, CUA announced it will adjust the maximum LVR for high density apartments valued at up to $1 million. Caps will vary based on whether it is a new (up to 12 months old) or existing apartment, and will also depending on whether the purchaser is an owner-occupier or investor.
“On the whole, these changes are designed to help more apartment buyers to qualify for a CUA home loan,” Rigg said. However, he added it will also help ease oversupply concerns.
“Some of the changes are also designed to manage the risks from forecasts of an apartment oversupply in some Australian cities in the coming two years.
“We want to assure homebuyers that CUA is committed to helping Australians buy their own home, whatever type of home that might be –an apartment, a townhouse, a traditional house on a ¼ acre block and so on.”