Budget 2021: Buying a home with super gets a boost but at what cost?
As part of the 2021-22 Federal Budget, the government has introduced a number of budget measures to give Australians a leg-up when it comes to buying their first home.
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Tic:Toc, Macquarie slash variable home loan rates for low deposit customers
Just when you thought home loan rates wouldn’t tumble any further, online lender Tic:Toc this week has reduced its variable offer to a new rock bottom for home buyers with smaller deposits.The Tic:Toc Variable Home Loan fell by 15 basis points to just 2.04% (2.05% comparison rate*) for owner occupiers making principal and interest repayments with loan-to-value ratios (LVRs) of up to 90%.It’s now the most competitive rate in the Mozo database at this LVR tier, or the third best among <80% LVR loans. Investors making P&I repayments weren’t left out either, with Tic:Toc’s variable rate for this borrower group dropping by 14 basis points to 2.19% (2.20% comparison rate*) for <90% LVRs.This again places Tic:Toc ahead of competitors, and it has now become the new variable rate leader in the Mozo database for investors too.But Tic:Toc wasn’t the only lender to announce variable rate cuts this week. Macquarie Bank also stepped in today with 15 basis point reductions across all of its variable home loans for owner occupiers. Rates now start as low as 2.34% (2.34% comparison rate*) with the Macquarie Basic Home Loan for owner occupiers on P&I repayments with <60% LVRs. Meanwhile, for higher LVRs of up to 90%, rates have dropped to 2.89% (2.89% comparison rate*). Or if you’re looking for a loan with more bells and whistles, the Macquarie Offset Home Loan (Package) also saw variable rates for owner occupiers on P&I decline to 2.34% (2.62% comparison rate*) for <60% LVRs and 2.89% (3.16% comparison rate*) for <90% LVRs.As a point of comparison, all rates mentioned above sit below the average variable rate in the Mozo database of 3.27%. These moves come just days after online lender Athena dropped its variable home loan to an ultra-low 1.99% (1.99% comparison rate*) for borrowers with <60% LVR.
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Buying a home with a 5% deposit - scheme to offer more spots under 2021 Budget
An additional 10,000 places under the First Home Loan Deposit Scheme (FHLDS) for new builds will become available from July 1 following an announcement made as part of the 2021 Federal Budget.
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Budget 2021: Family Home Guarantee to help single parents
Single parents hoping to get a foot on the property ladder will receive a boost this year, following the announcement of a new government initiative as part of the 2021-2022 Federal Budget.Dubbed the Family Home Guarantee , the program will allow single parents to purchase an existing home or build a new one with a deposit of as little as 2%.The program will commence 1 July 2021 and stretch over a period of four years, during which it will provide 10,000 guarantees to single parents with dependents.Importantly, the program won’t just be available to first home buyers. It will also support those hoping to re-enter the housing market after a divorce and family breakdown.To be eligible, applicants must be Australian citizens, at least 18 years of age, and have an annual taxable income of no more than $125,000.RELATED: What can we expect from the 2021 Federal Budget?Commonwealth Bank chief executive officer Matt Comyn said the measure will provide much-needed support to an often overlooked group.“This announcement will come as a welcome relief for hard working single parents, particularly those working in essential services such as education, health care and public safety, looking to buy their first home or re-enter the property market,” he said.Rates of home ownership are typically lower among single parents, who don’t have the benefit of a second income earner to help save for a deposit. Recognising that home ownership is a key source of intergenerational wealth, the program hopes to help single parents achieve financial security for their families.The program will benefit single mothers in particular, with the government estimating that 80 per cent of the 125,000 eligible Australians will be women.The government has also announced an additional 10,000 spots will be made available under the First Home Loan Deposit Scheme. These will be rolled out on 1 July 2021 and will allow eligible applicants to purchase a home with a deposit of just 5%, with the government guaranteeing the remaining amount.If you’re thinking of purchasing a home, browse our first mortgage guide for more tips. And to get a sense of the rates currently available, visit our home loans comparison page, or browse the selection below.
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UBank’s new home loan to waive lenders mortgage insurance for 15% deposits
Saving for a 20% deposit could take more than four years for the average Australian, but online lender UBank is offering a solution to help home buyers get into the market sooner. UBank today announced it will provide home loans of up to 85% loan-to-value ratio (LVR) for owner occupiers, without charging an extra cost known as Lenders Mortgage Insurance (LMI). LMI is usually required if you’re borrowing more than 80% of the property value, and this expense can add up to tens of thousands of dollars. One common way to waive LMI is to have a guarantor - usually that’s your parents or the government via its First Home Loan Deposit Scheme. But if neither option fits your situation, UBank’s new loan will give eligible borrowers with at least a 15% deposit another avenue for avoiding LMI. For customers with LVRs ranging from over 80% up to 85%, UBanks is introducing a variable rate of 2.49% (2.49% comparison rate*), available to owner occupiers making principal and interest repayments. Alternatively, the same borrower group could snag a three-year fixed rate of 2.05% (2.41% comparison rate*).These are ultra low rates compared to the rest of the Mozo database, sitting 78 basis points below the variable rate average (3.27%) and 27 basis points below the three-year fixed rate average (2.32%) for 80% LVR owner occupier loans.
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Home loan refinancing levels ramping up: ABS
New figures released by the Australian Bureau of Statistics (ABS) on Tuesday show that the number of Australian homeowners who are switching their mortgages is on the rise.
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House prices are still rising, but at a less frantic pace: Corelogic
The value of Australian property has jumped higher once again according to new data, though the rate of increase has slowed down compared to previous months.
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Gateway Bank introduces monthly LMI option for low deposit home buyers
There’s a common conundrum for many first time home buyers in Australia: save up for a 20% home loan deposit or purchase sooner with the added cost of lenders mortgage insurance (LMI).
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Do you have a 5% deposit ready? This home loan might work for you
As property prices continue to surge at record rates, saving for a first home deposit has only gotten harder. New research reveals that Sydneysiders are feeling this financial strain the most, with a $100,000 deposit no longer enough to fetch them a median-priced property. According to online lender homeloans.com.au, home buyers in NSW with a 5% deposit of $100,000 may only be able to fund properties of up to $780,000. This falls a massive $115,933 short of the current median property price for Sydney. Meanwhile Victorian buyers with the same-sized deposits are estimated to be able to afford properties of up to $710,000 - just shy of Melbourne’s median price of $717,767. However, for all other capital cities, home buyers with a 5% deposit of $100,000 could comfortably buy a median-priced property in the area.
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Home loan check-in: Are fixed rates on their way back up?
Ultra-cheap fixed rates have fuelled a rush to the property market and sent home values soaring, but a number of banks have begun increasing long-term fixed offerings, suggesting a market slowdown might be just around the corner. With the RBA’s term funding facility due to end in the second half of the year, longer term fixed rates will likely drift upwards, meaning the current interest rate environment might look a lot different in just a few months’ time.So far, the Commonwealth Bank has been the only major bank to reverse course. It lifted 4-year rates for its Fixed Rate Wealth Package by 20 basis points to 2.19% p.a. (3.73% p.a. comparison rate*), citing increased funding costs.Bank of Queensland also raised 4- and 5-year rates by 20 basis points at the same time it cut its 2-year offering. 4-year rates now sit at 2.29% p.a. (3.00% p.a. comparison rate*).Meanwhile, Teachers Mutual Bank increased 4-year rates by 19 basis points and 5-year rates by 34 basis points across its associated brands. More banks and lenders are expected to follow.Typically, only around 15% of mortgages are fixed, but the combination of rock-bottom rates and predictable payments have attracted plenty of borrowers in the past year, Right now, fixed rates account for more than one-third of new mortgages.At the time of writing, the lowest fixed rate offers among lenders we track are:
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