No deposit enquiries build

Saving enough to put a deposit on their first home remains a problem for some would-be buyers who are still chasing no-deposit loans

Despite the fact that banks no longer offer them, potential first-time buyers continue to seek 100 per cent home loans, says mortgage broker Loan Market.

Chief operating officer at the broker, Dean Rushton, says no-deposit home inquiries increased during the month of October, with 7 per cent of the brokerage inquiries coming from people looking for a loan with nothing down, up 1 per cent from the previous month.

“There remains strong interest from people who want to enter the real estate market and borrow the entire cost of the property,” says Rushton.

This is despite lending restrictions from the major banks, which now require genuine savings contributions of at least 5 per cent towards the property purchase. A deposit of this size demonstrates to the lender that the borrower has the capacity to save money and budget accordingly to manage the repayments.

A growing number of first home buyers are recognising this, and opening First Home Saver accounts .

These accounts were virtually ignored when introduced by the Labor government in 2008, however rule changes have increased their appeal and the Australian Prudential Regulation Authority recorded more than 31,000 accounts had been opened by June 2011.

The interest on the accounts is taxed at a concessional 15 per cent, and better still the government will give savers a bonus 17 per cent of any deposits they make up to $5500 a year.

A down side of the original account design was the four year waiting period imposed before the saver could buy a home. That’s now been waived, with the account proceeds simply paid into the mortgage when the four years are up.

Still, appetite for no-deposit home loans remains strong, and south-east Queensland property developer Devine Homes aims to feed it.

The company says it has received a “significant response” to no-deposit home and land packages this year.

Devine’s Queensland general manager Andrew Brimblecombe, says grants, including the $10,000 Queensland government building boost and the $7000 first home buyer’s grant had made the packages feasible.

BRW

Comments (0)