Banks urged to help renters become buyers
Banks should help more first time buyers get into the property market by allowing people applying for a home loan to use rental payments as evidence of genuine savings, Loan Market has said.
Dean Rushton, chief operating officer at the mortgage broker, said higher interest rates, tougher lending conditions and the end of the boosted federal government grant have been a "triple whammy" for first home buyers.
"Enquiries from first time buyers are down more than 40 per cent from a year ago and they are approaching all-time lows with much of the home loan activity at the moment around people refinancing," he said.
He noted that lenders require a percentage of the purchase price, normally five per cent, to be saved before a home loan can be approved but added it can be extremely difficult for people paying "the exorbitant rents customary these days" to save money.
Mr Rushton suggested rental payments should be taken into consideration as a factor in assessing genuine savings. This would allow people looking to compare home loans to finally secure a property.
Meanwhile, it was suggested this week that the Reserve Bank of Australia may grant borrowers a reprieve from further interest rate hikes when it meets again on June 1st.
This article is brought to you by Mozo – Helping you compare home loans