Bank’s lucrative offer to first home buyers
Westpac-owned St George Bank is attempting to lure first-home buyers by reducing the required deposit amount and slashing lenders' mortgage insurance to virtually nothing.
Effective of Monday, the regional bank will offer first-time home lenders the ability to access funds with only a 15 per cent deposit instead of the traditional 20 per cent requirement.
It has also reduced its lenders' mortgage insurance cost to just $1 for first-home buyers who hold a loan-to-value ratio of 85 per cent.
Usually, for a home with a property value of $650,000, lenders' mortgage insurance would be an approximate one-off annual payment of $6000 for anyone who holds a loan-to-value ratio of more than 80 per cent.
Research conducted by St George shows that it takes the average Australian 10 years to save the 20 per cent deposit needed for a home loan.
The bank also noted its studies concluded that 48 per cent of people looking for houses struggled with the lack of affordability in their desired area.
The Westpac group's first-home buyer deal comes after the bank missed out as provider for the national first-home buyers' grant, which was awarded to Commonwealth Bank and National Australia Bank.
St George general manager Ross Miller said the onset of the coronavirus pandemic had shifted more Australians into wanting to save for a home.
"Our research shows one of the biggest hurdles for first-home buyers to overcome is the time it takes to save for a deposit despite being in the financial position to make home loan repayments," he said.
"By reducing the expense of lenders' mortgage insurance, first-time purchasers may be able to afford a property that meets their needs sooner and save thousands of dollars."
The offer is available for owner-occupier firs- home loans on principal and interest repayments with a maximum loan amount of $850,000.
"Australians have spent more time at home than ever before during the COVID-19 restrictions, and we are seeing a bigger trend in how the nation is re-evaluating their current living situation," Mr Millar said.
It is understood the offer is only available through Westpac's St George Bank and not its other subsidiaries Bank of Melbourne or Bank SA.