 Deposit for home loans
A move by the Commonwealth Bank, along with National Australia Bank and ANZ means that first home buyers will now need at least a 5% deposit of their new home's purchase price. National Australia Bank has cut the amount it will lend as a proportion of the property value from 100 to 95 per cent, while ANZ has cut its loan-to-valuation ratio to 90 per cent.
Some are concerned this will put off first home buyers, while others are hopeful that the boost to the first home owners grant will still be enough to encourage buyers to the market.
The Commonwealth Bank says it is prudent to seek minimum deposits in the current economic climate.
Housing Industry Association chief executive Ron Silberberg agrees with the move hoping it will promote more responsible borrowing and lending.
"If people have got some hard-earned going towards the deposit on a dwelling, they're going to be more inclined to ensure that they keep their loan payments going no matter the circumstances," he said.
Due to the global financial crisis, most lenders will now move to tightened lending criteria, meaning that borrowers will need at least a 10% deposit.
But research figures from InfoChoice show that 145 lending institutions offer 100 per cent home loans subject to mortgage insurance.
The Federal Government recently boosted the First Home Owners Grant to $14,000 to first home buyers who purchase an existing home, and $21,000 for a newly built home. All contracts signed between 14 October 2008 and 30 July 2009 will receive the higher grant, which was increased from $7,000. Since the announcement in October, mortgage brokers and real estate agents have reported an increase in interest from first home buyers.
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