Some lenders are requiring borrowers to have bigger deposits to get a home loan.
A TWENTY per cent house deposit is the new norm as many lenders increase the amount borrowers need to have stashed before buying a home.
As climbing house prices continue to make purchasing a home for first home buyers challenging, new results show lenders are further tightening the screws on lending by asking for bigger deposits.
New analysis by financial comparison website Canstar has found the number of home loans requiring an 80 per cent loan-to-value ratio has risen from 28 to 60 in the past year.
And those who are getting loans with smaller deposits — who have saved between five and 20 per cent — are getting slugged with higher interest rates even if they sign up to the exact same mortgage product as other borrowers.
Canstar’s spokeswoman Justine Davies said lenders are continuing to flex their muscles on lending and it’s making it harder for borrowers.
“It is evident that the number of products which offer a maximum 80 per cent loan-to-value ratio has grown drastically,’’ she said.
“We what know anecdotally is that it isn’t that companies are taking their high loan-to-value (LVR) products off the market they are just making it more difficult for customers to successfully apply for these products.”
Canstar research show lenders including Bankwest, Bank Australia, Macquairie Bank and Victoria Mutual Bank are among those to decrease LVRs from as much as 95 per cent to 80 per cent.
An LVR is the loan size compared to value of the property, for example a person a $50,000 deposit on a $500,000 has a 90 per cent loan-to-value ratio.
The analysis found more than half of the home loans available on the market with an LVR higher than 90 per cent more than half require a family guarantee.
Under these arrangements if there is a default on the loan the guarantor takes responsibility.
But 1300homeloan director John Kolenda said many of the lenders requiring fatter deposits were for investors buying property ahead of owner occupiers.
“The owner occupiers are still able to get LVRs around 90 per cent, but the banks are trying to limit their investor portfolios so they’re are increasing the deposit size to 20 per cent,’’ he said.
“Saving a 20 per cent deposit and stamp duty costs is a significant amount of money so first-home borrowers could be years away from buying a property.”
For borrowers who have a deposit larger than 20 per cent they will save on hefty lenders’ mortgage insurance — this covers the lender not the borrower — and can cost thousands of dollars.
sophie.elsworth@news.com.au
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