As the prospect of another rate rise looms large, first homebuyers are expected to struggle even more to get into the property market.
To this end, mortgage insurer Genworth Financial and Citibank have teamed up to offer a no-deposit home loan (97% loan to value ratio) to qualified borrowers.
Successful applicants will receive a 7.49% Citibank basic variable loan with no application fee (usually $399) until 31 December. On top of this, borrowers will also get a $500 Harvey Norman voucher if they opt to take this type of loan with lenders mortgage insurance (LMI).
LMI is a one-off premium paid by borrowers that enables them to take out a loan without or with a lower deposit - in most cases up to 100% of the value of the property. LMI protects the lender if a borrower defaults on a loan repayment and the outstanding value of the home is more than what the lender would receive once it is sold.
"By taking out the lender's risk at the outset, taking out LMI allows you to purchase your dream home with as little as 3% of the purchase price, sometimes even less," says Martin Baxter, chief executive officer of Genworth Financial.
Also teaming up to offer a helping hand to struggling homebuyer are mortgage broker Mates Rates and St.George Bank. Their offering includes a fixed rate loan at 7.59% exclusively through Mates Rates. On top of the attractive interest rate, Mates Rates is also raising the monthly rebates it offers to customers from 0.15% to 0.20% for loans above $250,000.
"By increasing our rebate, we have almost completely rolled back the effect of the last interest rate rise," says Michael Lee, co-founder of Mates Rates Mortgages. "This means that borrowers are getting a bank loan with an effective rate below 7.39% after our rebate."
Read the latest issue of Your Mortgage to find out more on how to get into your home sooner.