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This article was produced in partnership with Granite Home Loans
Brokers can expect more clients to ask for help surmounting the LMI barrier in 2025, according to Granite, as interest rate reductions continue to push home prices up.
The Reserve Bank of Australia opted to hold the cash interest rate steady at 3.85% yesterday, going against expectations of a 25 basis point reduction in rates.
However Granite, part of Australian non-bank lender ColCap Financial Group, said property price increases stimulated by a broader downward rate trend would challenge borrowers, even as they take advantage of an increase in borrowing power.
“Existing clients with home loans will be relieved that interest rate reductions in the first half of this year so far have begun to ease their loan repayments,” said ColCap executive general manager – broker, retail & specialist distribution, Yianni Socratous.
“However clients wanting to take advantage of lower rates face having to save a deposit faster than prices rise if they want to surmount the traditional 20% LMI hurdle.”
Granite offers a Lender Paid LMI option on loans up to 95% LVR for professionals and 90% for essential workers, where the loan is for a residential owner-occupied purchase.
Rather than clients having to save a 20% deposit or pay LMI themselves, Granite takes care of the LMI cost, removing a large barrier to purchase that can lock out borrowers.
“We’ve seen more borrowers strategically paying LMI to beat price rises, and many have benefitted from entering the market sooner, rather than later,” Socratous said.
“With Granite Lender Paid LMI, we’re removing that barrier for quality professional and essential worker clients, allowing them to overcome the deposit barrier at speed.”
Cotality’s July 2025 Home Value Index found that national home values rose 1.4% in the June quarter. This price increase followed a 0.9% lift in the first quarter of 2025.
In commentary released alongside the data, Cotality Research Director Tim Lawless said the value growth was a direct result of falling rates, naming rate reductions as a “clear catalyst” for the renewed growth momentum.
However further house price growth, following significant growth in recent years, means even borrowers like professionals face difficulty avoiding the additional cost of LMI.
“Health, legal, accounting and other professionals can be at the start of financially rewarding career paths, but can still struggle with deposits and LMI,” Socratous said.
The same goes for essential workers like police officers, firefighters, paramedics, teachers and nurses, who typically have dependable income and strong job security.
“We need essential workers buying into the communities where they live and work, so Australians can continue to benefit from their contribution and services,” he said.
“Granite’s ability to pay LMI for qualifying essential workers can provide them with the stability of a home as they go out and do the jobs we all need them to do,” he said.
Socratous said the option can be useful for first homebuyers reluctant to ask for help from family, such as the bank of mum and dad, in the form of guarantor loans.
The option also suits borrowers who are unable to capitalise LMI into their home loan, in cases where they are seeking to borrow and enter the market with a higher LVR loan.
“Not having to worry about LMI just empowers the borrower; they can use their career prospects and clear credit history as a lever to independently enter the market.”
In July, Granite increased maximum loan amounts for Lender Paid LMI from $2 million to $2.5 million, and extended the maximum loan term from 28 years out to 30 years.
Socratous said the enhancements, which apply to professional and essential worker borrowers, seek to make home ownership more accessible in a rising market.
“These changes just make it easier for clients to find and purchase a property they want for their future and make that as affordable as possible from the outset,” he said.
The changes come alongside no minimum income or genuine savings requirements for professionals, helping those who have studied hard and have great careers ahead.
Essential workers only need $5000 in genuine savings, while if buying as a couple, only one borrower needs to meet the essential worker or professional criteria.
Clients are also not locked into their starting rate; as they pay down the loan, Granite is able to reduce the rate as their reach incremental LVR milestones.
“At Granite we innovate in areas like LMI to provide rock solid support for brokers in the day-to-day scenarios they are encountering with their clients,” Socratous said.
“Our Lender Paid LMI is exciting, because we are extending our promise to support brokers to their clients, so they have a foundation on which to build their own futures.”
“With the market expecting more rate cuts from the RBA in 2025, clients may well decide innovative LMI choices like Granite’s are exactly the tool they need,” he said.
Granite Home Loans is part of leading Australian non-bank lender ColCap Financial Group. Get in touch with the Granite team.
