New report shows they are exploring alternative pathways to homeownership
Sentiment among home buyers is a mix of optimism and concern as the current economic climate underscores the challenges prospective home buyers face in saving for a deposit, according to lenders mortgage insurance provider Helia.
The latest Helia Spotlight research found that while the desire to own a home remains strong, many find it increasingly difficult to save a deposit, with a significant 89% of first-home buyers saying it is harder than ever to buy their first property, while 88% feel it is more difficult to save for a deposit.
To navigate these hurdles, homebuyers without the traditional 20% deposit are exploring alternative pathways to homeownership. The research indicates that 58% of homebuyers are aware of these alternatives.
The Helia report on homebuyer sentiment also showed that the declining ability to save a 20% deposit is compelling aspiring hombuyers to assess all available options, whether for their first home, an investment property, or subsequent properties for their portfolio.
Lenders mortgage insurance (LMI) has been identified as a viable pathway to homeownership, with nine in 10 first home buyers considering LMI to purchase their home, up from 73% last year. Moreover, over half of all purchasers (55%) used LMI to buy their property, an increase from 36% last year.
“LMI is an alternative pathway to achieve homeownership for buyers without a 20% deposit,” said Greg McAweeney (pictured above), chief commercial officer at Helia. “LMI enables buyers to enter the property market, consider buying a larger home and, ultimately, start building equity sooner.
“It’s heartening to see in our research that most prospective buyers are showing resilience in the face of the current market challenges and researching alternate ways to achieve their homeownership dreams.”
Other options considered by prospective homebuyers include government assistance schemes (48%), the ‘bank of mum and dad’ (45%), working overtime to save more money (39%), or cutting back on dining out and hobbies (68%). However, 42% reported they were unaware of alternative pathways.
McAweeney highlighted that prospective buyers are also open to other options, such as purchasing a first property that is not their “dream” or “ideal” home or buying property as an investment while living elsewhere, known as “rentvesting.”
“Investment in property and LMI go hand in hand,” he said. “LMI offers investors the key to unlocking the property market with confidence. It offers investors greater flexibility in their investment strategies, whether they aim to purchase a single property for long-term capital appreciation or build a portfolio of properties for rental income.
“LMI allows investors to tailor their approach to suit their financial goals and risk appetite, enabling them to maximise their potential returns and build wealth through strategic property investment, sooner.”
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