Surging low deposit lending sparks negative equity fears as property prices slide

Buying with a five per cent deposit can get you through the front door, but it doesn’t give you much of a safety net once you’re inside, says Canstar’s Sally Tindall. Australians are entering the property market with barely any financial buffer just as home values slide and mortgage arrears climb above their historical average. Australian Prudential Regulation Authority (APRA) data revealed $15.6b in low deposit loans had been taken out in the nine months since the uncapping of the government’s Home Guarantee scheme. The government’s five per cent deposit scheme enables eligible first homebuyers to save on Lenders Mortgage Insurance (LMI) while getting into the market with a deposit as little as five per cent. While the proportion of new owner-occupier loans with a five per cent deposit represents 4.31 per cent of all new owner-occupier loans written in the quarter, the timing is concerning, with property prices on the slide across the nation. Australians are entering the property market with barely any financial buffer. “The number of borrowers getting into the property market with barely any skin in the game has surged yet again, at the same time the housing market is shifting in...