As even prime clients struggle to secure a deposit, more alternative lenders are getting innovative – could the high-LVR mortgage wars be heating up?
Private credit player Assetline is the latest non-bank to jump on the low‑deposit lending train, launching a 95% LVR mortgage aimed at borrowers who want to avoid costly lenders mortgage insurance (LMI).
Such is the state of the Australian housing market that even an IT professional on $300,000 can struggle to pull together a 20% deposit – particularly if they’ve set their sights on a prestige property on Sydney’s Lower North Shore.
Sure, there is no shortage of low‑deposit options out there.
First‑home buyers can tap into the government’s 5% Deposit Scheme – but the lender profile is strictly limited to those without an existing property portfolio, and price thresholds limit what properties fall under its purview.
Borrowers can also go through traditional lenders and pay LMI – on a $1.65 million property (roughly the average Sydney house price), that premium can hit nearly $100,000, according to savings.com.au’s LMI calculator.
Or they can turn to a growing cohort of fintechs claiming to have cracked the low‑deposit code, such as Skip (formerly Sucasa), the Sydney startup making waves with 98% LVR loans.
Assetline’s new Generate loan follows a similar playbook to other products on the market. It uses a mortgage stack: an 80% first mortgage and a 15% second mortgage, together delivering a 95% LVR. Both sit on 30‑year terms – less common among competing products – which lowers monthly repayments and creates more serviceability headroom.
Because the borrower is paying principal and interest on both loans, they are building equity from day one. Common scenarios have rental income paying off the second mortgage for an investor, or an owner-occupier aggressively paying down the second mortgage before refinancing to a traditional lender.
Assetline’s general manager sales, distribution and partnerships, Royden D'Vaz, expects most borrowers to refinance away within three years – at which point, he argues, they are likely to be “in the money” compared with having paid LMI, assuming valuations hold up.
That assumption is not guaranteed. Australia’s legendarily hot housing market – now about 55% above pre‑COVID levels – is finally showing signs of cooling. Commonwealth Bank is forecasting price growth to slow to 3% in 2027, down from nearly 10% in 2025 and a projected 5% this year, with Sydney and Melbourne expected to decelerate faster than Perth, Brisbane and Adelaide.
While outright price falls are not widely forecast, homeowners should brace for more modest paper gains, particularly if the most hawkish Reserve Bank of Australia (RBA) cash rate scenarios play out.
Even so, D'Vaz believes “there is a massive market” for these loans, stressing that Assetline is being highly deliberate in its target market determinations. To mitigate risk, the lender is cherry‑picking both borrower profiles and properties, going after effectively prime clients who fall short only on deposit size – for example, an upgrader trading out of Outer Western Sydney and into Surry Hills without a full 20% deposit.
Assetline is also targeting refinancers looking for cashout, such as to fund renovations, with cashout limited to $250,000 and subject to credit approval. The group is treating Generate as a pilot while it weighs expanding the product; self-employed borrowers can currently apply, but it is limited to certain professions.
Low deposits, high competition?
“If you don't have parent support, have an inheritance, or you've won the lottery, it's quite difficult to get in (the property market),” said D'Vaz. Generate, he suggested, is simply another option for brokers to put in front of clients struggling to bridge the deposit gap.
Assetline could be getting on the front foot with Generate, as more lenders mull low-deposit lending to service the shifting demands of Australian middle-income earners.
“Assetline deserves a bit of credit here,” one veteran broker told MPA on review of the product. “They’ve come a long way and are starting to properly push into that La Trobe Financial/non-bank space. That’s where all the interesting stuff happens, so it’s a good sign.”
Generate is “niche, no question… It’s not something you’d be rolling out every day, but when it fits, it fits and solves a problem the majors just won’t touch,” the broker added. “Skip has been around this space for a while as well, they have a good product too, so it’s not completely new, but Assetline is adding a bit of pressure, which is only a good thing.”
By the sounds of it, the low-deposit lending wars are set to heat up. Watch this space.
