REAL ESTATE INVESTMENT TRUSTS & FUNDSRESIDENTIAL PROPERTY

St George courts first home buyers with $1 mortgage insurance

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LENDER St George is looking to win a larger share of the lucrative first home buyers’ market by reducing its Lenders Mortgage Insurance (LMI) to only $1.00 for eligible customers with a Loan to Value Ratio (LVR) up to 85%.

This latest move by St George will heat up competition amongst the lenders after the latest figures from AFG Mortgage Brokers shows ANZ Bank has overtaken the Commonwealth Bank with the largest market share of all mortgages, driven by cash back offers and low fixed rate products.

The St George First Home Buyer home loan offer means eligible customers can put forward a minimum deposit of 15% of the value of the property and pay LMI of $1.00. It is available to owner occupier first home loans on principal and interest repayments, with a maximum loan size of $850,000 (up to a maximum property value of $1,000,000).

The 2020 St George Home Buying Report found two thirds (64%) of first home buyers expect to face financial problems leading up to their first property purchase, including the most common difficulty, building up a deposit (50%).

Close to half (48%) are saving more in order to buy in their desired area, and nearly three in every 10 first home buyers are struggling to find a property that suits their needs.

St George general manager Ross Miller said the move paves the way for first home buyers to buy their first home by saving a 15% deposit, instead of the traditional 20% of the value of a property purchase price.

“Our research shows one of the biggest hurdles for first home buyers to overcome is the time it takes to save for a deposit, despite being in the financial position to make home loan repayments.

“Generally, a family home with a property value of $650,000 means a buyer would also be looking at a one-off payment of more than $6,000 for the cost of LMI if they had less than a 20% deposit,” he added. “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,”

St George research showed one in every 10 Australians looking to buy a home are doing so for the first time and that the COVID-19 pandemic has made one third of Australians want to save for that goal quicker.

“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. 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.” Miller said.

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