Low-deposit loans lures offered to first-home buyers

BankWest is among those expecting first-home buyers to return to the market and has lowered its deposit requirements to seek their custom.

First-home buyers have been largely absent since the 2009 conclusion of the government first-home buyers’ boost, but estate agency Century 21’s chairman Charles Tarbey predicts first-home buyers and first-time upgraders will dominate the market during the traditional spring buying season.

“Most activity will be in the first-home buyer and upgrader segments. People that are looking to buy property under the $800,000 mark will be very active over the coming months,” Tarbey has told trade website Real Estate Business.

In Western Australia, BankWest is encouraging first-home buyers by offering a new home loan that allows first home buyers to purchase a property with as little as a 3% deposit.

BankWest has joined with property development companies Satterley Property Group and 30 other WA builders to offer half a billion dollars for the new 3% deposit home loan products, to be used exclusively by WA first homebuyers.

It is expected to be offered to about 1,500 borrowers who meet a minimum annual income threshold of $80,000 with the loans capped at $500,000.

Australian Property Monitors senior economist Andrew Wilson agrees with Tarbey, adding that an extended period of rate stability would help push first-home buyers back into the market.

Besides the rates stability Wilson says reduced competition for properties due to fewer buyers and more properties listed for sale is encouraging entry level buyers and “first-time change-up buyers”.

A rise in the number of first-time buyers taking out mortgages has been noted recently by Mortgage Choice.

Loans submitted by Mortgage Choice brokers on behalf of first-home buyers spiked to 35% of all loan approvals in June, compared with an average of 27% for the past year.

"What I'm starting to see is a return of first-home buyers to the market as housing prices are going through a mild correction, and as longer-term interest rates look like coming down," says chief executive Michael Russell.

According to figures by mortgage broker AFG, there was a brief uptake in first-home buyer numbers in spring last year. First-home buyer numbers increased from 20.6% of all loans written in August 2010 to 24.2% in September and 25.4% in October. But first-home buyer numbers fell back to 22.5% in July 2011, according to AFG.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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