Buy now or save a bigger deposit?
Aspiring property buyers are eager to get into the property market with almost half more inclined to borrow more in order to purchase property sooner rather than save a full 20 per cent deposit.
Aspiring property buyers are eager to get into the property market with almost half more inclined to borrow more in order to purchase property sooner rather than save a full 20 per cent deposit.
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According to QBE Lenders’ Mortgage Insurance (QBE LMI) latest mortgage report, which surveyed 864 mortgage holders and aspiring buyers, 49 per cent of budding property buyers said that getting into the property market now was more important than saving for a bigger deposit.
The survey also found that the average time taken to save a deposit for a first purchase is four years.
“The first home buyer segment, who are typically younger and have lower incomes [than other buyers], expect an average deposit of 15.87 per cent of the purchase price,” said QBE LMI chief executive officer Ian Graham.
That 15.87 per cent translates into an average deposit of $58,047, according to the report.
The survey also found that first home buyers rely largely on high interest online savings accounts, with 54 per cent saving their deposit this way.
Mr Graham said there were advantages to both buying now or waiting and saving.
“If house prices rise faster than what borrowers can save, they might be priced out of the market,” he said.
“Nevertheless higher savings means borrowers are able to either borrow a smaller amount or upgrade on their property choice.
“Buyers must assess their financial situation, have a budget and ensure they can afford future interest rate rises before they consider entering the property market.”
