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Solo home buyers ‘growing force’ in market: ME Bank

by Malavika Santhebennur4 minute read

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The proportion of solo borrowers and their average home loan size has jumped during the pandemic at ME Bank, it has revealed.

Analysis by ME Bank has found that home loan applications from solo purchasers increased three percentage points in 2020, compared with 12 months prior, to 38 per cent of all applications received by ME Bank.

The bank noted that this increase came despite house prices surging in 2020, and observed that singles are a growing force in the property market.

The average loan size for single-mortgage applications increased by 1 per cent to $405,755, with home loan averages increasing by 0.8 per cent for single men and 1.2 per cent for single women.

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Despite the marginal increase in the size of the average home loan for women in the past year, the loan size for single female applicants has remained well below men at $386,222, compared with $424,820 for single male applicants.

The ME Bank data also revealed that single men are likely to enter the property market before single females, buying in at an average age of 32, compared with 34 for females.

Comparatively in 2018, the average age for single first home loan applications for both women and men were 35, demonstrating that many home buyers are entering the property market earlier.

Single females comprise 49 per cent of all single home loan applications, down 1 per cent from the previous year, the analysis revealed.

Commenting on the findings, ME Bank head of home loans and personal banking Claudio Mazzarella said: “Despite escalating house prices, the dream of home ownership is still a priority for many Australians – whether they’re applying for a loan by themselves or with someone else.

“While there can be challenges with solo applications, such as saving for a deposit and borrowing capacity, it’s certainly not impossible.”

Mr Mazzarella suggested various avenues for single home buyers seeking to enter the property market but unsure about a single mortgage application.

He said: “One strategy to consider is co-buying – purchasing a property with a family member or friend. Co-buying enables both parties to save for a deposit in a shorter time frame and increases your overall borrowing capacity.

“Also consider a guarantor − someone who uses their property as security for your loan. When you have a guarantor, lenders are more likely to let you borrow more money, so if you default and can’t pay your loan, they can sell that property as well as yours to recoup their losses.

“Alternatively, one can buy as a ‘rentvestor’ − an investor who owns property but continues to live in rental property. The combination of rental income and potential tax breaks saves valuable additional cash while allowing you to maintain your lifestyle by living in an area where you cannot purchase.”

The ME Bank data has followed the announcement of a new measure to help single parents purchase property in the 2021-22 federal budget.

The new Family Home Guarantee – which is due to begin on 1 July 2021 – aims to support divorced or separated parents with dependent children by enabling them to buy a home with a deposit of as little as 2 per cent, allowing the applicant to secure a home loan without requiring to pay lender’s mortgage insurance.

The government will guarantee up to a maximum of 18 per cent of the property purchase price.

The scheme will provide 10,000 guarantees over four years to single parents with dependents, with applicants required to be Australian citizens, at least 18 years of age, and have an annual taxable income of no more than $125,000.

[Related: 4 in 10 home owners planning to sell]

Solo home buyers ‘growing force’ in market: ME Bank
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Malavika Santhebennur

Malavika Santhebennur

AUTHOR

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

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