- Average deposit for first home buyers is now $106,743
- This is an increase of 16% compared to 2019
- Finder survey says 11% of first home buyers need 10 years of savings to afford deposit
Australian Bureau of Statistics (ABS) data has revealed that the average deposit to secure a mortgage is now $106,743.
This is an increase of 16% – or $14,851 – compared to January 2019 – marking the first time the average deposit has been in the six figures.
The average first home buyer deposit varies nationally from $81,438 in Tasmania to $128,469 in New South Wales for an average loan of $426,971.
Finder’s First Home Buyers Report 2021, which surveyed 1,028 first home buyers, found that 11% of respondents said it would take more than a decade to scrape for a deposit of this size. A 20% deposit is what is needed to avoid Mortgages Lenders Insurance.
Finder Home Loan Expert, Sarah Megginson, said that the act of saving for a house deposit is already a significant financial hurdle for first home buyers.
“Prospective buyers are being stumped by a supercharged property market, which isn’t showing any signs of slowing down just yet.
“Low interest rates have made it cheaper to pay down a mortgage, but this has pushed up property prices, making it even harder to save for a deposit,”
Sarah Megginson, Finder
The same research from Finder shows that 38% of those surveyed took between two and five years to save for a deposit with another 25% taking five to ten years to save the appropriate amount.
Ms Megginson added that there are schemes in place for first home buyers to wish to fast-track homeownership without a 20% deposit, such as the First Home Loan Deposit Scheme. This scheme allows eligible buyers to secure a mortgage with only a 5% deposit with the difference guaranteed by the National Housing Finance and Investment Corporation (NHFIC).
Currently, 27 participating lenders offer places under the scheme.
Therefore, a first home buyer could purchase a property worth $600,000 in New South Wales or most of Victoria with just a $30,000 deposit – although this, of course, means more interest over the life of the loan.
Additionally, there are various conditions such as property caps depending on where you intend to live, and the scheme is means-tested.
“While this does increase the cost of the mortgage over its lifetime through interest, the gains you stand to make as the property increases in value over time could potentially outweigh the extra interest costs.
“It’s important first home buyers weigh up all of these pros and cons when considering a real estate purchase.”
Sarah Megginson, Finder