Banks are making it harder for people with small deposits to get into the market. The number of products that are available for buyers with small deposits has diminished significantly on the back of the APRA recommendations.

In 2015 76% of all loan products were offered for a small deposit borrower. This has now dropped to less than 30%. The banks focus is now on customers with deposits of 20% or more.

With rising property prices this makes it harder for people to enter the market at an early age, when they have not had the time to save up for a larger deposit required under the new rules. Even though these customers may be on a high income.

The idea is that it will stop any delinquent loans hitting the banks. I don’t agree with that. People don’t get themselves in trouble with residential property due to lack of equity. Banks don’t reposes homes because they have dropped in value. Banks reposes homes when the interest in not getting paid. This is a serviceability issue, not an equity one.

The banks are cutting LVRs on direction from APRA, yet on the other hand, the government is also giving out a $20,000 to help people get into the market. Seem strange to you??
This is a good example of why it is important to get into the market when the chance arises and you have the capacity. People that procrastinate miss out. It may be just because some external factor changed that then makes it impossible to get into the market. Carpe Diem people!