Shared equity loans expensive way to buy
THE new shared equity mortgage allows borrowers to buy property they traditionally couldn't afford – but this privilege isn't cheap, particularly if house prices jump.
The new product has sparked fears it will add to the growth in house prices because of the extra flow of liquidity to the market.
The loan has been launched as an equity finance mortgage (EFM) and is issued by Adelaide Bank and funded by Rismark International.
Brian Jones, managing director of non-bank lender Homeloans, which recently wrote the country's first EFM loan in Perth, said the product was designed to overcome poor home affordability in NSW and Victoria.
"It's had that original foundation in that there was a problem with, particularly younger people and affordability in high-value markets, possibly having to move away from family and look for employment elsewhere rather than having free access to the markets and the geography that they were accustomed to," he said.
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