Hot on the heels of UK and Korean policies aimed at stimulating mortgage borrowing, news has broken that no deposit mortgages could soon be making a comeback in Australia. From Australian Broker Online:
Non-bank lender Homeloans Ltd’s launching of a new product aimed at borrowers without genuine savings as a deposit may signal a change in the lending environment…
The product, FlexiChoice NonGen 95… caters to borrowers who have little in the way of a deposit, don’t have 5% genuine savings to contribute, or have an equity contribution that may be a gift, First Home Owners Grant or debt…
The primary focus of what is, Mitchell admits, essentially a 100% loan, is getting first home buyers into the market – and in this area, he says, the concept of a minimum 5% deposit may be slightly irrelevant…
“It’s difficult when you’re paying rent and then to accumulate a 5% genuine savings… You’re not borrowing 100%, but you don’t have to demonstrate any savings – but the 5% still has to come from somewhere.”
Mitchell, says the requirement for substantiation of savings in respect of the equity contribution is also waived for loans up to 95% LVR…
If clients are borrowing 95% to purchase an owner occupied property and have no genuine savings or have obtained the 5% from a gift or a loan, the FlexiChoice NonGen 95 is a great solution.”
And folks question why MB supports macroprudential policy.
