Leading mortgage broker Loan Market Group has urged first time property buyers to be well prepared when they try to obtain housing finance after finding one in three enquiries will not fit the current lending criteria.
Loan Market Group Chief Operating Officer Dean Rushton said tighter lending rules which requires genuine savings contributions of around 5.0 per cent towards the property purchase was creating major hurdles for new buyers.

He said other loan applicants who passed all the lending criteria were being rejected because they had few assets.

“The major lenders are in a competitive position where they can pick and chose who they want to lend money to and there is little room to move for applicants who do not fit the box,” Mr Rushton said.

“We are finding that 30 per cent of first time buyers who enquire about housing finance won’t even get past first base.

“Just like the sketch on the comedy series ‘Little Britain’, if the computer says ‘No’ the lenders are simply not interested.”

Mr Rushton said a mortgage broker was best placed to help would-be buyers understand the requirements to obtain home finance under the changing criteria.

“An awareness of each lenders products and capabilities is also highly beneficial to ensuring there are no problems with the approvals process,” he said.

Mr Rushton said buyers had been able to use the boosted First Home Owners Grant as a contributor to their deposit but this had become more difficult since the concession was partly reduced on September 30.

Banks earlier this year reduced their maximum loan to valuation ratio’s (LVR’s) to as low as 90 per cent in response to the global financial crisis.

But Mr Rushton said family equity options were still available to help first home buyers and families entering the residential real estate market.

He said under the family equity guarantor’s support policy, parents or another immediate family member can help with loan servicing and security support.

“The most popular of the family equity options is the limited liability guarantor and there has been an increase in enquiries for this since some of the major banks reduced their LVRs to 90 per cent,” Mr Rushton said.

“But all parties do need to be aware that in the case of a default, the family members are liable for the percentage they secure.

“If you’re in the first home buyer category then you should plan ahead and talk to a mortgage broker in advance to understand your position before you target your property price range.”