Loan warning for homebuyers

There are concerns homebuyers have failed to learn from the global financial crisis as increasing numbers buy properties with little or no deposit.

More than 850 first-homebuyers in WA had less than 10 per cent deposit in the year to September, according to research by consultancy Digital Finance Analytics.

This is up 75 per cent on the 485 borrowers with similarly small deposits in the previous 12 months.

Financial website RateCity said more than 100 home loan products currently offered up to 97 per cent of a home's value, and one offered 100 per cent, provided the borrower had a guarantor.

DFA principal Martin North said the number of mortgages with a high loan-to-value ratio was a dangerous trend, similar to the one that contributed to the GFC.

"Have we learnt anything from the GFC? No," he said. "It looks like we are going into the same cycle."

Mr North said high LVR loans were not a problem until the borrower was unable to make repayments.

This occurred on a wide scale in the US in 2007, when rising unemployment prompted masses of people to default on their loans.

It occurred mostly among homebuyers with poor credit ratings who borrowed no-deposit, high-interest loans in the subprime market.

Without any equity in the form of a decent deposit, many defaulting homebuyers found they owed more on their homes than the properties were worth.

Mr North said borrowers should not be naive and accept the maximum amount a bank was willing to lend them. Instead, they should borrow an amount they could afford to repay.