‘Slippery slope’: Low FHB deposits spark NINJA loan fears

First homebuyers are getting on the property ladder using increasingly smaller deposits, with new data showing they’re only stumping up 8 per cent of the loan upfront as governments offer more incentives.

Research by Great Southern Bank reveals government assistance and financial help from family are making it easier than ever for first-time home seekers to buy a home.

The bank found the average first homebuyer — a third of whom were aged 35 and over — had secured a home loan with a deposit of between 7.7 per cent and 8.9 per cent in the past 12 months.

A couple who have just signed a mortgage after buying their first house. Picture: iStock.

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In Queensland, the government has announced a new Boost to Buy scheme allowing those earning $150,000 or less the ability to buy a home valued up to $1m with just a 2 per cent deposit.

Independent housing researcher, Cameron Kusher of Kusher Consulting, said governments’ involvement in the housing market by way of incentives risked pushing up prices further.

In a post on his LinkedIn account, Mr Kusher said:

“I get that we want more people in homes, but 2 per cent deposits for $1 million homes? I fear it is only a few years until governments here in Australia are supporting NINJA loans and 100 per cent LVR mortgages.

Cameron Kusher, independent property analyst.

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“It seems like a slippery slope to me, one that both sides of politics continue to dabble in.

“Not to mention the more that the government is involved in housing, via underwriting LMI, the more incentive they have for higher prices and thus the less incentive for lower prices.”

Maria McQullian, a broker of 25 years and owner of Concinnate Financial Services, said the majority of first homebuyers were securing their properties with a 5 to 15 per cent deposit.

“The First Home Guarantee (FHBG), Family Home Guarantee (FHG), family guarantor and lenders’ mortgage insurance (LMI) discounts are all beneficial in situations where it might take years to save a 20 per cent deposit and could mean missing out on the opportunity to buy at current prices,” she said.

New research shows the average first homebuyer deposit is now 8%. Picture: David Swift.

“Lenders can waive your LMI if you apply for a home loan through the Australian government’s Home Guarantee Scheme (HGS).

“It allows eligible home buyers to get on the property market with a deposit as little as 2-5 per cent and Housing Australia guarantees the rest.

“The re-elected Albanese government has also promised first home buyers there’ll be no LMI to pay so long as you have a 5 per cent deposit and meet eligibility criteria.”

A happy first homebuyer couple sign a form for a home deposit.

Great Southern Bank’s ‘No Place Like Home Report’ also revealed 43 per cent would look at government schemes for financial help, while about a quarter would ask their family for help or buy with a friend or sibling.

Great Southern Bank chief customer officer Rolf Stromsoe said customers were finding a variety of pathways to home ownership.

“These pathways play a crucial role in getting Australians on the property ladder sooner, and with a smaller deposit,” he said.

“Aspirational buyers should strongly consider talking to a home loan expert or broker about their support options — they may need less than they think.”

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