The industry itself is divided about whether or not no deposit home loans will be available soon, but even those who think no deposit loans will make a return believe that the product will suit only a handful of borrowers.

And while 95% home loans are more readily available than they have been in recent years, there are still a number of conditions that borrowers need to meet, including demonstrating at least a portion of the deposit required comes from genuine savings.

Given that, and that in many cases 95% home loans are available only to a select market – for example some lenders may restrict these types of home loans to existing customers – it seems reasonable that any 100%, no deposit home loan that is introduced would have extensive criteria to be met.

In any case, low deposit holders may have other options available to them to assist with the purchase or property; a good mortgage broker can work through your options with you.

Source: The Adviser

The result was widely expected after patchy economic data failed to make a case for either a rise or fall of the cash rate.

Stable interest rates is a welcome result for mortgage holders and people looking to enter the property market, although banks and lenders may still raise variable home loan interest rates independently.

Competition in the home loan market, particularly surrounding fixed rate home loans and low deposit home loans, has been increasing over the past few weeks, providing good opportunities for mortgage holders to review their loans with a view to reduce costs.

Sam White, deputy chairman of Ray White and executive chairman of Loan Market, told the Daily Telegraph that the Sydney market is “like a coiled spring”, and that the property group expected intense competition for the expected 24,000 properties that will go on sale in the next couple of months.

Real estate agents are predicting that October will be a bumper month, due to a combination of improving economic sentiments and the continuing stalemate in Canberra.

Families and property investors both have a strong presence in the market right now, and even though first home buyer numbers are lower than the same period in 2009 (when the First Home Owners Grant Boost was in effect), this is still a keen buyer group thanks to an increase in options in the low deposit home loan space.

In conjunction with increased competition and more relaxed lending standards, the Spring property market will providing some great opportunities for home buyers and sellers, but with many people looking to buy it’s important to organise your finance in advance – a home loan pre-approval is an ideal first step to discuss with your mortgage broker.

Apartment developments had been suffering in the post-GFC era, after developers and buyers had more hurdles to jump to achieve finance approval.

Organising your home loan for an off-the-plan purchase is often a little different to organsing a standard home loan.

In the period between signing your contract and paying a deposit, and settling on the property, you will need to confirm your finances. If you already have a loan approval, you will need to reconfirm the offer from your lender soon. There may be changes to your approval, including the amount you can borrow, the interest rate on offer, and the conditions on full approval.

An assessment of your situation at this time can confirm that your current loan is the right one for you. After all, there may have been a number of changes to your personal situation and the home loan market since you first applied for your home loan, including interest rate rises and changes to lending policies.

If you have not yet secured loan approval, now is the time to investigate your loan options and submit your loan application.

For first home buyers, it’s important to review your entitlements as there have been a number of changes over the past year to the level of support that is available to you.

Source: Broker News; Loan Market

After announcements earlier in the week from a handful of lenders that low deposit – that is, 95% – home loans were back on the agenda, more lenders have today added low deposit products back into their home loan suites.

First home buyers often find low deposit home loans useful, particularly as the time taken to save a deposit has blown out in recent years.

Conditions do differ between lenders, but there may also be the option of capitalising your Lenders Mortgage Insurance, effectively taking your borrowings to 97%, again something that will benefit first home buyers in particular. Check with your mortgage broker for details.

Despite the return of the low deposit loan, it is unlikely that no deposit home loans will be revived, in part due to bank and lenders not having the appetite for risk, and in part due to new legislation for the industry requiring more in-depth investigation into a borrower’s ability to repay a loan.

The latest in low deposit home loans are generally available to clients purchasing an owner-occupier property who can demonstrate a solid savings and employment history. In some cases, the loans are only available in certain areas.

The good news on the low deposit front comes at the same time more lenders move to lower their fixed home loan rates, providing many borrowers with a good range of competitive home loans to choose from.

Interest rates on both fixed home loans and variable homes loans vary from lender to lender, so talk to a mortgage broker about what home loan options are available to you.

Loan Market Manly mortgage broker, Andrew Watson, said that such strength in the market has its pros and cons.

“If you are an existing property owner in the Manly area, strong property prices can only benefit you as the equity in your property increases,” said Andrew.

“Such a result can open up opportunities for you to invest in property using your equity.”

For those looking to purchase property in the area, smart home loan or investment loan choices can make a difference to your options, according to Andrew.

“Knowing and understanding your home loan options, especially when it comes to the deposit you require and the types of loans available to you, is crucial,” said Andrew.

“I can help you to understand how you may be able to buy property in the Manly area, even if you are self-employed.”

And with extensive experience in commercial loans under his belt as well, Andrew may be able to offer you a different path to property ownership, through commercial property investment.

“Many investors, particularly first-time investors, think solely in terms of residential property, but a good commercial property investment can be just as solid an option,” he said.

Source: Loan Market, Manly Daily

Loan Market Chief Operating Officer Dean Rushton said despite the RBA leaving the cash rate on hold at 4.5 per cent, lenders would lift their rates independent of any RBA decision and could strike soon after the August 21 federal election.

“They have clearly flagged that they are considering lifting their rates against the trend and out of cycle because their cost of funds is increasing due to the ongoing European debt crisis and the roll-over of cheaper funding,” he said.

“It is not a matter of if banks will lift their rates but when because they are not only paying more for wholesale rates but paying more on deposits, which is another key area of their funding.

“This is a development which will be of concern to mortgage holders.”

Mr Rushton said the RBA was likely to keep rates on hold when its board next meets on August 3 unless there was an alarming increase in next week’s official inflation figures.

“The major lenders could also hold off on any rate increases until after the federal poll,” he said.

“But borrowers should be prepared for rates to rise in the final quarter of 2010 because of the wholesale funding issue.”

Mr Rushton said the increase in rates this year has resulted in a 20 per cent increase in fixed rate home loan enquiries at Loan Market.

“The fixed rates market has become more competitive with several lenders reducing fixed rates in the last month but not many people are opting to switch from a variable loan at this stage,” he said.

Source: Loan Market

“The deposit requirements have changed significantly over the past few years and such creatures as no deposit loans have disappeared,” said Kaylene.

“A lot of potential first home buyers weren’t really prepared for that – ready to service a mortgage yes, but provide a deposit for it, no.”

According to Kaylene, for first home buyers who don’t want to wait to make their first property purchase, using the equity in a family member’s home may help bring forward your purchase plans.

“Family equity, as it is commonly known, is making use of equity that your family has in property, usually the equity in your parents’ home,” said Kaylene.

“Typically, your parents guarantee the deposit portion of your home loan, and once you have built equity up to an acceptable level, they are removed from the loan agreement.”

Kaylene has helped countless first home buyers to make use of family equity, and to ready their finances for a new home loan.

The survey of its brokers by leading mortgage broker Loan Market found 56 per cent believed family equity and gifts had become the fastest growing method of acquiring a deposit.

The survey of 114 of Loan Market’s 500 brokers around Australia found 42 per cent cited genuine savings as the most popular means of obtaining a home loan while just two per cent listed a Government First Home Saver Account as the emerging choice.

Loan Market Chief Operating Officer Dean Rushton said borrowers had to resort to friends and family more often due to the tighter lending regimes.

“Enquiries from first time buyers are down more than 40 per cent from a year ago and foremost among the factors restricting potential property purchasers is the difficulty in saving a deposit for a home loan,” he said.

“Younger buyers, in particular, are having to borrow as much as 20 per cent of the property price to obtain a loan and that can mean having to find a considerable sum of money to get into the market.

“So we are seeing increasing cases of borrowers being gifted their deposits from close family or friends or in other cases parents using the equity in their own home to enable children to obtain a deposit.”

Mr Rushton said Loan Market had been advocating for lenders to take rental payments into consideration as a factor in assessing genuine savings for a home loan deposit.

“That would enable many people to pursue the dream of home ownership,” he said.

 Mr Rushton said there had been an increase in inquiries for family equity mortgage options since major banks reduced their maximum loan to valuation ratio (LVR) to 90 per cent in response to the global financial crisis.

 He said under the family equity guarantor’s support policy, parents or another immediate family member can help with loan servicing and security support.

“The most popular of the family equity options is the limited liability guarantor and we are noticing an increase in inquiries for this since some of the major banks reduced their LVRs,” Mr Rushton said.
 
“Under this option two loans are taken out, one at 80 per cent of the property value, which is secured by the purchaser, and one at the remaining required percentage which is secured by the property of parents or another family member.

Mr Rushton said parents can be relieved of the equity responsibility once the LVR reaches an acceptable level.

“But all parties do need to be aware that in the case of a default, the family members are liable for the proportion they secured,” he said.

Source: Loan Market