An online home loan marketplace provider says a brand new deposit-free mortgage is an ideal opportunity for young professionals to get on the property ladder.
Through lender Granite Home Loans, HashChing has brought a loan to the market which allows borrowers who meet a strict list of requirements the ability to bypass the slog of the initial save and be lent the entirety of the price of the property.
But you’ll need a university degree, three years professional experience and be earning at least $150,000 a year to even be considered.
The loan is, however, far more accessible to couples which only demands a combined income of $180,000.
HashChing chief operating officer Siobhan Hayden told news.com.au that despite the downturn in the housing market, saving for a deposit can be a “herculean task” particularly when juggling rent and rising cost-of-living pressures.
She says the first homebuyer’s scheme doesn’t offer sufficient support to get younger Australians on the property ladder in the unrealistic markets of Melbourne and Sydney.
“Because of this, there’s a clear gap in the market, and we’re proud to be able to offer a workable and realistic solution,” Ms Hayden said.
“We know that for many people, purchasing a property is a 30 year proposition.
“By enabling no-deposit home loans, we are letting eligible Australians start on this journey sooner at a competitive rate.”
Versions of the loan already exist but are restricted to medical and law professionals which offer 90 per cent of the cost of the property without lender’s mortgage insurance.
Th HashChing loan is available to professionals in a range of fields including finance, IT and engineering and also waives lender’s insurance.
Stricter lending from banks in the wake of the royal commission as well as weaker housing prices has stalled the industry, Ms Hayden says.
“The buyer urgency has slightly dissipated given the heat has come off the market, particularly in Sydney and Melbourne, however it doesn’t remove the fact that being able to build up a deposit while you’re renting and living is still a huge impediment,” she said.
“Many young people have often leveraged the bank of mum and dad, but there’s a number of people out there, a large portion of younger people, that don’t have the bank of mum and dad to access.
“This is what the changing market needs is new and innovative lending products to help customers that generally don’t want to be in rentals and would like to get into the market and buy.”
Ms Hayden says the lending criteria for the loan means the risk of consumers signing up for a debt they can’t afford is reduced.
“The lender is analysing their suitability, affordability and also the applicant’s discretionary spend,” she said.
“If you’ve got two high-earning qualified applicants that have no deposit at all, the lender is also curious to know what they are doing with their funding.
“So it is still about the suitability of the applicant and what they’re doing with their money.”
Expectations that the Reserve Bank will cut the official cash rate for the first time in 32 months at its May meeting tomorrow appear to be waning, despite the odds of a move being at their highest point in years.
Financial markets last week indicated a 48 per cent chance of a cut tomorrow off the back of low inflation and weaker-than-expected economic growth numbers.
Today, traders were betting on a 37 per cent chance of a rate cut.
“I think it’s going to be a hold by a whisker,” Saxo Bank markets strategist Eleanor Creagh said. “We don’t have quite enough to tip them over the edge just yet. They’re probably going to wait until after the election when the political uncertainty has subsided.”
Weighing against persistently low inflation, which has undershot the RBA’s target band of 2-3 per cent for four years, is a reasonably robust labour market with unemployment low at 5 per cent.
More importantly, the RBA has only twice before intervened in an election by changing the cash rate — up in November 2007 and down in August 2013 — and both times the government of the day was booted out.
Given that history, it’s a decision that could have a big bearing on whether or not Scott Morrison can hang on to government, given the economy is central to its campaign pitch.