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Staff Reporter
Australia’s smaller lenders are stepping up to the plate, reintroducing 100 per cent mortgages in a bid to claw market share away from the majors.
Late last week, Mortgage House announced it would provide borrowers with up to 105 per cent of the property’s value.
Home Loan Hints founder Paul Ryan said 100 per cent home loans would be incredibly beneficial to first home buyers.
According to Mr Ryan, the 100 per cent home loan along with the first home buyers grant was a tremendous benefit to first home buyer’s ability to get into the home loan market and realise the great Aussie dream.
“First home buyers are now required to come up with 5 per cent deposit. Given the property prices in metropolitan Australia we are asking first home buyers to come up with something $15,000 to $30,000. That is a massive challenge,” he said.
Mr Ryan is calling on both smaller and larger lenders to reintroduce no-deposit home loans. However, he believes many lenders are hesitant to do so because they are worried about the impact 100 per cent mortgages would have on property prices.
“I hear the reasons why not to help, but I would rather look at ways in which we can help and alleviate such concerns,” Mr Ryan said.
“One way home loan providers can assist is to develop a first home buyer’s product where all home loan providers apply an increased debt service ratio to calculate how much a consumer can borrow.”
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