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The dream of owning a home is becoming more elusive for many first-home buyers, with saving for a deposit remaining a huge barrier.

A study from Lenders Mortgage Insurance (LMI) provider Helia found that 90% of first-home buyers are facing difficulties in saving up for a deposit as costs of living increase and mortgage rates go up.

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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
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  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
  • Find out your loan eligibility in 2 minutes or less
  • Complete your application in less than 20 minutes
  • Low fees and fast approval times
5.95% p.a.
5.95% p.a.
$2,385
Principal & Interest
Variable
$0
$0
90%
5.94% p.a.
5.95% p.a.
$2,383
Principal & Interest
Variable
$0
$0
90%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

Helia CEO Pauling Blight-Johnston said more buyers are turning to LMI to help fast-track their journey to homeownership.

“We know first-home buyers are still motivated by the long-term financial benefits of homeownership and are keen to step out of the rental cycle and avoid rising rental costs,” she said.

In fact, the study showed that around 27% of recent homebuyers used LMI to break into the market.

The study also showed that when purchasing, 41% of first-time buyers had opted for a home loan with a fixed-rate period in recent years.

While the fixed-rate borrowers were protected from the recent rate hikes, more than half of first-time buyer surveyed will see their terms expire in the next 12 months.

Meanwhile, around a quarter of borrowers will have their fixed terms end in the next six months.

For those whose fixed rates are expiring over the next 12 months, 64% said they are likely to refinance.

Overall, 33% of recent home buyers are struggling to meet their repayments.

Meanwhile, more than half of borrowers said an increase of 1% in interest rates would put additional strain on household budgets.

A recent study by Domain showed a different take on rate hikes and saving for a deposit.

According to Domain, the time it takes for couples to save a 20% deposit on an entry-priced dwelling has declined by up to 13 months since before the rate hikes started last year.

Domain chief of research and economics Dr Nicola Powell said the movement of interest rates had a huge part in reducing the time it takes for homebuyers to save for a deposit.

“A time machine has been offered to first-home buyers across Australia, as falling property prices in certain cities, higher interest rates accrued on savings and wage growth have aligned to reduce the time to save for an entry-priced property deposit,” she said.

What’s next for interest rates?

Next Address founder Julie O’Donohue said the rate hike has to curb at some stage and it’s a good thing that the RBA has stalled the hikes.

“Confidence will be lifted and more buyer activity can be expected — this also means that those currently selling can expect greater interest in their property,” she said.

Mrs O’Donohue said the market climate will likely improve as it moves to another stage of the property cycle.

“While many may want to ‘watch and wait’ what the RBA will do in May and June, there are already signs of greater activity in both, buyers and sellers,” she said.

Following the pause in April, the Westpac-Melbourne Institute Consumer Confidence Index lifted 9.4% to 85.8, with confidence across mortgage holders growing 12.2%.

“It is clear that there seems to be a change in the air many have been waiting for,” Mrs O’Donohue said.

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Photo by Joslyn Pickens from Pexels.

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