Some banks and credit unions are relaxing their lending criteria in order to attract potential homebuyers in a difficult mortgage market.
SGE Credit Union is now offering borrowers 100% of a property's purchase price - the first time in three years lenders have offered loans with no deposit.
The lender says the new product is aimed at parents wanting to help their children into home ownership.
“The Get Ahead Start home loan option allows parents to use some of the equity in their own home to guarantee part of a home loan taken out by their children. This gives the children the ability to borrow more, or borrow up to 100% of the value of the property plus stamp duty and other upfront costs. It can also help avoid the cost of mortgage insurance that applies to high LVR loans.”
RAMS is also targeting new home owners by axing its application fee until the end of January, saving borrowers $595 in fees, including the valuation fee.
According to financial comparison website RateCity data, 70% of home loans now offer 95% or more of the purchase price.
Spokeswoman Michelle Hutchison told News Ltd that lenders are fighting harder for customers and market share. However, Choice spokesman Matt Levey says no-deposit loans could tip homeowners into financial distress.
"Just because it looks affordable now, there are a lot of things that can change in the economy and in your life that might make it less affordable in the future.”
