Banks too tough on first home buyers
Banks are preventing first home buyers from entering the property market by refusing to recognise rental payments as evidence of genuine savings, says leading mortgage broker Loan Market. Loan Market Chief Operating Officer Dean Rushton said activity from first home buyers had fallen dramatically this year and was unlikely to pick up with further rises in interest rates forecast.
Mr Rushton said tougher lending conditions which changed the deposit criteria when applying for a home loan was one of the major deterrents for first time buyers. “Australian lenders require a percentage of the purchase price – normally five per cent – to be saved for all loans but it is very hard for people paying the exorbitant rents customary these days to save much money,” he said.
“But if rental payments were taken into consideration as a factor in assessing genuine savings requirements that would enable many people to pursue the dream of home ownership. People caught up in the rental trap will be helped if the banks adjusted their policies and placed a greater emphasis on rental payments, particularly in capital city locations.”
Source: Loan Market