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Gen Y in the dark on saving for a home deposit

Posted: 16 May 2018 1:49 pm
News

Millennials may have unrealistic expectations around the deposit they need to save.

New research from ING shows most millennial Australians don't know how big a deposit they need in order to buy their first home. The bank's Millennial Homeownership Report revealed that 61% of millennials aren't sure how much they need to save, including 40% who are actively saving.

"The challenge is not in wanting a home, but how they go about getting it. While 88% of millennials want to own a home to give them a sense of security about the future – they’re just not sure how much they need to save to get a foot on the property ladder," ING Australia head of retail banking Melanie Evans said.

Of those who say they think they know how much they need, the average deposit amount they think they need to save is $76,000. While this amount would serve to provide more than a 10% deposit for a median-priced capital city home of $655,630, as per the most recent CoreLogic data, it would still see millennial home buyers paying for lenders mortgage insurance.

Moreover, the ING research shows millennials aren't looking for smaller apartments. More than 40% of millennials say they're likely to purchase a three or more bedroom house. Only 7% said they were likely to buy a one bedroom apartment.

However, millennials are willing to sacrifice on location to achieve their property ambitions. The research found 61% of millennials anticipate buying in a less established and more affordable area.

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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 90% Incl. LMI (Owner Occupier, P&I)
2.78%
2.79%
$0
$0 p.a.
90%
$2,000 to $3,000 refinance cashback
Get a competitive variable interest rate with no application fee or ongoing fees. Refinance to an eligible Suncorp loan and get a cashback of $2,000 or $3,000, depending on your loan amount. Other conditions apply.
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
IMB Budget Home Loan - Special LVR  ≤90% (Owner Occupier, P&I, NSW and ACT borrowers only)
2.78%
2.84%
$449
$0 p.a.
90%
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
Yard Variable Home Loan - LVR 90% (Owner Occupier, P&I)
2.65%
2.68%
$0
$0 p.a.
90%
A competitive variable rate for home buyers with 10% deposits saved. Optional offset account (with $10 monthly fee).
HSBC Home Value Loan - Promotional Offer LVR 90% (Owner Occupier, P&I)
2.69%
2.70%
$0
$0 p.a.
90%
A competitive value home loan with no ongoing fee.
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