Higher deposits, stretched LVRs & more borrowers needing mortgage insurance
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Higher deposits, stretched LVRs & more borrowers needing mortgage insurance

New report shows the challenges involved in buying a home are getting tougher

By Bronwyn Allen
Thu, Nov 30, 2023 10:35amGrey Clock 2 min

The amount of money required for a home deposit is rising and more than half of home buyers had to pay lenders’ mortgage insurance in FY23, according to a new report released by PEXA.

NSW recorded the highest median deposit in FY23 at just below $120,000, up 3.9 percent on FY22. In Victoria, the median deposit was $84,723, down 0.5 percent, and in Queensland it was $78,143, up 8.5 percent.

The time it takes to save these deposits is on the rise. Based on the median family income in each state and a 15 percent savings rate, PEXA found NSW buyers now need an average of almost eight years to save their deposit. This is up a whopping 83 percent since 2020. It takes Victorian buyers a little over five years to save their deposit, up 64 percent since 2020. It takes Queensland buyers just under five years, up 37 percent over two years.

Average deposit-to-value ratios (DVRs) increased to about 20 percent across the three major eastern states as a result of lenders tightening their credit criteria in FY23. The DVR is the amount of cash a buyer contributes to a purchase. The average DVRs in FY23 were 20.4percent in NSW, up 1 percent on FY22; 19.5 percent in Victoria, up 0.8 percent and 19.8percent in Queensland, up 1.5 percent.

The PEXA data shows most borrowers are taking out the maximum possible LVR (loan to value ratio) to fund their purchases. The average LVRs among borrowers in FY23 were 79.6 percent in NSW, 80.5 percent in Victoria and 80.2 percent in Queensland. The research shows the major banks averaged higher LVRs, suggesting they are more open to lower deposit borrowers, due to their visibility of borrower’s income and expenditure via existing banking relationshipsThis also meant more major bank customers had to pay lenders’ mortgage insurance (LMI).

Most lenders will not lend more than 80 percent of a property’s value without forcing the borrower to pay LMI. This insurance protects the bank from default and can be very expensive. Over half of new borrowers had to pay LMI in FY23. The rate was highest in Victoria, where 56.5 percent of new borrowers had to take out LMI.

The PEXA report said rising property prices meant buyers needed higher deposits, making it tougher to buy a home and making the “generational wealth gap more apparent”.

As a result, younger buyers are increasingly tapping the Bank of Mum and Dad to help them achieve the required deposit, as well as taking advantage of government support through various programs.



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Sparkling wine flows as Australian winemaker takes out top international award

The Tasmanian-based winemaker was among a number of Australian producers to be honoured at the event in London this week

By Robyn Willis
Thu, Jul 11, 2024 2 min

An Australian winemaker has taken out the top prize for sparkling wine at the International Wine Challenge, the first time a local winemaker has done so. It marks just the second time in the competition’s 40-year history that the award has gone to a winemaker outside France’s Champagne region.

Tasmanian-based House of Arras’ chief winemaker, Ed Carr, was presented with the award for Sparkling Winemaker of the Year at a special ceremony in London earlier this week.

“I’m incredibly honoured to be named this year’s Sparkling Winemaker of the Year. It’s a challenge to describe the feeling, but I’m proud to be recognised amongst my peers for such a significant international award,” Mr Carr said.

The IWC is considered one of the world’s most rigorous and impartial wine competitions. This year, France topped the medal tally with 72 gold, 394 silver and 455 bronze medals – extending their haul by 84 more wins than last year.  

The 40-year-old competition is considered one of the most influential events in the winemaking calendar.

Australian winemakers took out second place, with 54 gold, 250 silver and 154 bronze medals. Australia also won 19 trophies, 10 of which went to South Australia.

House of Arras also received the Australian Sparkling Trophy for its 2014 House of Arras Blanc de Blancs, as well as two gold and six silver medals.

Tasmania’s cool climate and soil make it ideal for producing world-class sparkling wine says Ed Carr (pictured).

Mr Carr said Tasmania’s cool climate and terroir were equal to the world’s best sparkling wine regions. The wins follow a strong showing this year at Australia’s National Wine Show and the Decanter World Wine Awards, where House of Arras also collected awards.

“2024 has been an outstanding year on the awards front, and I’m honoured to add this recent recognition from the International Wine Challenge to the mantle,” he said. 

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11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

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Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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