Using family equity has become an increasingly popular method of raising the necessary funds for a home loan deposit, a new survey has found.
Loan Market Group’s latest survey found 56 per cent of brokers believed family pledges and gifts had become the fastest growing method of acquiring a deposit.
Of the 114 respondents, almost 42 per cent cited genuine savings as the most popular means of obtaining a home loan while just two per cent listed a Government First Home Saver Account as the emerging choice.
Loan Market chief operating officer Dean Rushton said borrowers had to resort to friends and family more often due to the tighter lending regimes.
“Enquiries from first time buyers are down more than 40 per cent from a year ago and foremost among the factors restricting potential property purchasers is the difficulty in saving a deposit for a home loan,” he said.
“Younger buyers, in particular, have to borrow as much as 20 per cent of the property price to obtain a loan and that can mean having to find a considerable sum of money to get into the market.
“So we are seeing increasing cases of borrowers being gifted their deposits from close family or friends or in other cases parents using the equity in their own home to enable children to obtain a deposit.”