According to recent figures released by the Australian Prudential Regulation Authority (APRA), there was a 12.6% decline in the number of new home loans approved in the 12 months ending 30 June, 2019.
Getting more specific, the regulatory body recorded an 11.1% decrease in new owner-occupier loans and a 15.8% drop in new investment loans.
The data also revealed that home loans with a high-LVR (loan to value ratio) increased from 20.3% to 21.5% - approximately 68.1% of these loans had an LVR between 80-90%, while 31.8% of loans had an LVR over 90%.
“I’m not surprised by these figures, given how difficult it is to save for a 20% deposit with rising living expenses,” said Mozo Banking Expert, Peter Marshall.
“There’s no denying that borrowing with a deposit of 10% or less can get you into the market sooner, but borrowers still need to be aware of the fact that it does mean they’ll pay Lenders Mortgage Insurance (LMI).”
Lenders Mortgage Insurance is a one-off payment made by a borrower taking out a loan with a deposit smaller than 20%. The amount of LMI a borrower will be charged depends on the size of their loan.
“There’s a common misconception with LMI in terms of the beneficiary - LMI is for the lender, not the borrower. It safeguards the lender in the event that you are unable to make your monthly repayments,” explained Marshall.
“This cost can be many thousands, so you might want to think about adding it to your loan amount, or getting a guarantor to avoid LMI entirely.”
So if you’re an Aussie borrower looking to snap up a property this season, you’re going to need a hot home loan deal. That’s why we’ve gone ahead and rounded up some great home loan offers than allow you to borrow with a 10% deposit.