69% of millennial homeowners only took five years to save for house deposit: ING

Emma Duffy By on October 14, 2019
 
millennial home owner

Photo by Neora Aylon on Unsplash

Owning a home has seemed out of reach for a lot of millennials but new research from ING suggests it could be far more achievable than we think.

One in three Australian millennials thinks it will take them over 10 years to save for a house deposit, while 90% are concerned they won’t ever save enough money.

But the reality is quite different. Over two-thirds (69%) of millennial homeowners say it took them no more than five years to save for a house deposit.

Those are the findings from a study commissioned by ING which surveyed over 1,000 Australians aged between 18 and 39.

Melanie Evans, ING Head of Retail Banking, said the research found the current low-interest-rate environment is encouraging millennials to get into the market earlier, with 50% currently saving for a deposit and 58% of first homeowners already looking to move up the property ladder.

“With all-time low mortgage rates, homebuyers who can overcome the hurdle of a 20% deposit will likely find that servicing a loan is easier than ever,” Ms Evans said.

ING has been busy cutting its home loan rates, reducing rates on a number of its fixed rates hours ahead of the recent Reserve Bank board meeting, then cutting rates again after the RBA’s decision to reduce the cash rate to a historic low of 0.75%.

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Compromise is the key to getting on the first rung of the property ladder, with 55% of millennials who already own property saying they sacrificed on their wish list in some way.

Would-be buyers are less willing to make sacrifices, with only 38% saying they would be willing to compromise on the type of home and location to get a foot in the door.

Ms Evans said millennials have to be willing to make some sacrifices if they’re serious about owning a home.

“While many millennial Aussies believe that homeownership is a far off dream, our research has found that the reality of owning a home is far closer than they think. You just need to be willing to make some small sacrifices in the first instance to save for that deposit and compromise on the type of home you’re willing to take on to kick off your homeownership journey.

“There’s no need to put pressure on buying that ‘dream forever home’ for your first property, as you can always upgrade later. In fact, our research shows that 58% of millennial homeowners are already on the move up the property ladder.”

Of the wish list items millennials are willing to compromise on, dream location (36%) and storage space (21%) are the top two.

The research also found over a third (35%) of millennial homeowners had trouble understanding home loan applications.

Over a third (37%) of millennials own their own home, while 40% rent and one fifth (20%) live with their parents.

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Purchase or Refi, P&I 80% Smart Home Loan 2.88% 2.90% $1,660 More details
Discount Variable 80% 3.07% 3.09% $1,702 More details
Base Variable Rate Special P&I 3.20% 3.20% $1,730 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Purchase or Refi, P&I 80% Smart Home Loan
2.88% 2.90% $1,660
More details
Discount Variable 80%
3.07% 3.09% $1,702
More details
Base Variable Rate Special P&I
3.20% 3.20% $1,730
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 18 November 2019. View disclaimer.

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in 2018. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers’ products may not be available in all states.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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Emma Duffy
Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand.

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