property
Lenders mortgage insurance: when it makes sense to pay it
Wollongong buyers with smaller deposits are choosing to cover lenders mortgage insurance to lock in properties before further price growth locks them out.
How we reported this
First home buyers across Wollongong are opting to pay lenders mortgage insurance rather than delay purchases until they reach a 20 per cent deposit.
The choice has gained urgency because new home starts fell 11 per cent nationally in the most recent quarter, leaving the federal housing accord targets further behind schedule and pushing more Sydney buyers into the Illawarra corridor.
Local market pressures in key suburbs
Properties in Fairy Meadow and Thirroul now routinely attract multiple offers from Sydney commuters, with median prices near the NSW figure of $860,000. Buyers targeting three-bedroom homes near the University of Wollongong campus in Gwynneville or along the coastal strip in Thirroul face the same calculation: pay the insurance premium or risk missing the next price step-up.
Wollongong City Council’s CBD renewal program along Keira Street has added further demand, drawing young professionals who qualify for the state’s First Home Owner Grant yet still fall short of the 20 per cent deposit threshold on a $700,000 unit.
When the premium pays for itself
Data from recent sales shows that properties in these pockets have risen between 6 and 8 per cent annually over the past two years. For a buyer borrowing 90 per cent on an $860,000 home, the one-off lenders mortgage insurance cost of roughly $12,000 can be recovered within 18 months if prices continue their current trajectory, according to figures released by NSW Treasury in June 2026.
Prospective purchasers should run the numbers with their lender using current stamp duty concessions and the 2026-27 NSW budget settings before signing. Those who decide the premium is worth paying can move ahead with contracts on homes in Fairy Meadow or Thirroul without waiting another year to save the extra deposit.
This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.