St. George has announced a bold strategy to help first home buyers enter the property market.
From today, the bank has reduced Lenders Mortgage Insurance (LMI) to only $1 for eligible first home buyers with a Loan to Value Ratio (LVR) of up to 85%.
Saving for a deposit can be one of the biggest barriers to home ownership, with St. George research revealing the entire process of saving and planning can take almost ten years.
The LMI reduction paves the way for first home buyers to buy a home with a 15% deposit, rather than the traditional 20%, potentially shortening the process greatly.
St. George said a family home with a property value of $650,000 would have to pay more than $6,000 for LMI if they had a deposit under 20%.
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.
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%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. 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 03 August 2020. View disclaimer.
The offer is available to owner-occupier first home loans on principal and interest repayments (P&I), with a maximum loan size of $850,000 for a maximum property value of $1,000,000.
St. George General Manager Ross Miller said many first home buyers were in a financial position to make home loan repayments but struggled to overcome the time it takes to save for a deposit.
“We are seeing many pain points experienced along that savings journey, including giving up holidays, reducing entertainment expenses, having to move back home with parents, moving in with friends or even leaning on family members to help top-up savings," Mr Miller said.
“By reducing the expense of Lenders Mortgage Insurance, first time purchasers may be able to afford a property that meets their needs sooner and save thousands of dollars.”
The 2020 St. George Home Buying Report found 64% of first home buyers expected to face financial problems leading up to their first property purchase.
Almost half (48%) were saving more in order to buy in their desired area, and nearly three in every ten were struggling to find a property that suits their needs.
The research also revealed one in every ten Australians looking to buy a home were doing so for the first time and a third of Aussies want to save for that goal quicker as a result of COVID-19.
“Australians have spent more time at home than ever before during the COVID-19 restrictions, and we are seeing a bigger trend in how the nation is re-evaluating their current living situation," Mr Miller said.
"For example, three-quarters of people would now prefer to live in a house over an apartment.
“First home buyers are calling for new ways to achieve their home ownership dreams sooner, and this option is designed to help make that goal within closer reach, particularly with the added benefit of a record low interest rate environment.”
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 November 2019. 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. To be considered, the product and rate must be clearly published on the product provider's web site.
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.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
- How are young people in Melbourne sharehouses coping during COVID-19?
- How to sell an investment property
- How The Block’s Bianca Chatfield is saving for a house during COVID-19
- How can I get a classic car loan?
- Bank of Us, Bank First slice home loan rates