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The Commonwealth Bank’s move to make first home buyers contribute a self-funded deposit of 3 per cent towards their home loan has been met with approval by mortgage brokers.
A spokesperson for the bank confirmed with Mortgage Business yesterday that its lending policy was under review.
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This followed comments earlier this week from chief executive of CBA retail banking services Ross McEwan that the bank would roll out a new 3 per cent deposit requirement over the next few weeks in a bid to avoid any dramatic borrower fall-outs once rates began to rise again.
CBA’s deposit requirements come as lenders move to tighten lending standards due to the weaker economic environment; of the big five banks just St George continues to offer no-deposit loans.
Christine Tyler, managing director of Consolidated Credit Services, told Mortgage Business CBA’s deposit requirement was a sensible decision.
“First home buyers are usually quite young and I don’t agree with lending them 100 per cent of a home’s purchase price,” she said.
A small deposit showed commitment and ability to manage a home loan, Ms Tyler said.
Garry Compton from The Home Loan Advisory Service agreed: “At times like this, when money’s cheap, some kids decide to go out and buy a house when they’re not really prepared for it.”
“A lousy $7,000 or so is not much to ask.”
And some brokers do not expect home loans without deposits to be available for much longer.
Just 14 per cent of brokers polled by Mortgage Business in January expected 100 per cent loans to still be available by the end of the year. A majority 65 per cent expected maximum LVRs to be in the 90s.
