One brokerage is calling on the banks to view rental payments as evidence of genuine savings.
According to Loan Market Group’s chief operating officer Dean Rushton, first home buyers will struggle to enter the property market until the banks view rental repayments as evidence that they can meet their mortgage payments.
“Australian lenders require a percentage of the purchase price - normally five per cent - to be saved for all loans but it is very hard for people paying the exorbitant rents customary these days to save much money,” he said.
“But if rental payments were taken into consideration as a factor in assessing genuine savings requirements that would enable many people to pursue the dream of home ownership.”
First home buyer activity has fallen dramatically this year and is unlikely to pick up with further rises in interest rates forecast.
“People caught up in the rental trap will be helped if the banks adjusted their policies and placed a greater emphasis on rental payments, particularly in capital city locations.”