Major Bank Move Sparks New Era for Low-Deposit Buyers
Sweeping policy shift lets borrowers enter the market with deposits starting from just $31,000 shaking up Australia’s mortgage landscape.
A major Australian lender has scrapped lenders’ mortgage insurance (LMI) for borrowers with 10 per cent deposits, a move that could redefine how first-home buyers and investors enter the property market.
For years, LMI has been one of the most stubborn barriers to home ownership, adding tens of thousands in upfront costs for anyone unable to reach a 20 per cent deposit. This latest change signals a new competitive phase among major banks, one that could put home ownership within reach for those who have been locked out by rising rents and stagnant wages.
What’s Changing
Under the new policy, borrowers can now secure loans with deposits as low as 10 per cent, without paying LMI. That means the entry price for a home could fall to as little as $31,000 in some areas, a figure that would have been unthinkable just a few years ago.
Analysts say the move could save buyers up to $175,000, depending on the property value and location. The change also reflects a growing trend among digital and challenger banks seeking to attract younger buyers frustrated by traditional lending hurdles.
The Deposit Breakdown
Across the country, the new structure opens doors to markedly lower entry points:
Sydney: Around $175,000 for houses in middle-ring suburbs; as low as $50,000 for some units in western Sydney.
Melbourne: From $86,000 in inner areas like Maidstone, dipping to $61,000 in fringe suburbs.
Brisbane: House deposits from $80,000; units from $46,000–$62,000 in central or outer suburbs.
Adelaide: Between $69,000 and $80,000, depending on suburb proximity to the CBD.
Perth: Houses near $71,000, with units starting from $48,000.
Hobart: Entry points of $46,000–$49,000, reflecting smaller-scale markets but tighter supply.
Darwin: The lowest threshold nationally is around $31,000, a rare affordability outlier.
Canberra: From $62,000–$86,000, in line with the city’s stable public-sector housing demand.
This variation underscores how location continues to shape the real cost of entry, even within a national lending reform.
A Shift in Buyer Behaviour
For many Australians, the removal of LMI could mean the difference between years of saving and getting a foothold now.
Some property experts believe it will accelerate the trend of “rentvesting”, where younger buyers purchase in more affordable areas while continuing to rent in their preferred lifestyle suburbs. Others warn that easier access to finance could fuel further price competition in already-tight housing markets.
Still, for first-home buyers facing record rents and living costs, the change offers something rare: a real and immediate path to ownership.
Bigger Picture: What It Means for the Market
Economists suggest this move could trigger a wider shift in the mortgage sector. With affordability pressures intensifying, other major lenders may feel compelled to match similar offers in 2025.
If replicated across the industry, such policy shifts could help offset the effects of recent interest rate increases, particularly if the Reserve Bank of Australia maintains a cautious stance on further tightening.
The broader message is clear: lenders are recalibrating to capture a generation of Australians desperate to buy. Whether this ultimately cools or fuels property prices will depend on how far competitors follow suit and how regulators respond to the surge in lower-deposit lending.
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