Hopeful homebuyers are pulling out all the stops to increase their budget as housing prices soar by taking on more debt or asking family for help.
Mortgage brokers are fielding enquiries from buyers who have already gained pre-approval but soon realise their limit is not enough to keep up with price rises – and need more cash fast.
Some potential buyers, who thought they had a 20 per cent deposit saved, are choosing to borrow a higher amount even if it means paying lenders’ mortgage insurance.
Others are getting help from the “Bank of Mum and Dad” in the form of cash gifts or guarantor loans made easier by the rise in the value of their parents’ own home amid the booming market.
It comes as housing prices soar across the country, with property values growing at their fastest rate in 17 years over February on CoreLogic data. Prices are at record highs in every city except Darwin and Perth, Domain figures show, while home lending hit record numbers for the second month in a row, the Australian Bureau of Statistics (ABS) reported this week.
The price jump is fuelled by an improving economic outlook after the COVID-19 crisis, combined with ultra-low interest rates and government stimulus measures – and the market could rise more if responsible lending laws are relaxed.
The Reserve Bank noted house prices had increased in its monthly statement on Tuesday but again emphasised plans to keep the cash rate on hold for three years, noting that lending standards remain sound “and it is important that they remain so”.