Alternative Paths to Home Ownership Gain Momentum

Traditional homeownership paths are changing, as Australians increasingly look at new ways to enter the property market, amid rising living costs and affordability challenges. 

According to Helia's latest Home Buyer Sentiment Report, only 15 per cent of first-home buyers believe they can save a full 20 per cent deposit of a property, leading to increased interest in alternative finance options like lenders mortgage insurance (LMI).

The report reveals that 84 per cent of first-home buyers preferred to purchase sooner with a smaller deposit, rather than delay their purchase to save more.

Cost of living has overtaken housing prices as the main barrier to homeownership. Greg McAweeney, Chief Commercial Officer at Helia, said LMI has become a popular solution. "LMI allows homebuyers to secure a property with as little as a 5 per cent deposit, eliminating the delay caused by waiting years to save a full 20 per cent," Mr McAweeney said. 

Changing family dynamics 

While family support remains key for young buyers entering the property market, this approach is evolving. Direct contributions to deposits from parents dropped from 60 per cent in 2023 to 47 per cent in 2024. Instead, families are finding alternative ways to assist, such as helping with ongoing costs and covering LMI fees, the report finds. 

Looking beyond major cities

Affordability challenges are pushing buyers to consider interstate purchases, with 40 per cent of first-home buyers now exploring this option. The trend of 'rentvesting'—buying an investment property in a more affordable location while renting elsewhere—is also gaining traction. PropTrack data reveals that a median-income household earning over $112,000 per year can now afford just 14 per cent of homes nationwide, compared to 43 per cent three years ago. 

The evolving role of mortgage brokers 

These shifting trends have transformed the role of mortgage brokers. They are no longer just loan facilitators but also offer expert guidance, helping buyers to navigate modern homeownership options. The Helia report shows that 91 per cent of first-home buyers plan to use a mortgage broker for their expertise, time savings, and access to better deals.

"Mortgage brokers play a vital role in educating clients about the benefits of LMI as a viable alternative to traditional savings strategies," Mr McAweeney said. "By not offering LMI as an option, mortgage brokers risk missing clients who might otherwise have been able to afford a mortgage with a smaller deposit and LMI." he said. 

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Neeed any other advice, please get in touch brigid@spinfinancebrokers.com.au