A Median-Income Household Can Afford 12% of Homes. Mortgage Choice Just Put a 98% LVR Loan in Its Network

What the affordability numbers actually say

The realestate.com.au Housing Affordability Report 2026, released on 5 September, found that a household on the median income of about $125,000 could afford roughly 12% of homes sold across the 2025–26 financial year. Five years earlier the same household could afford 43%. For a household earning $76,000, the figure is 2%.

On the report’s measure, mortgage repayments now absorb about 35.5% of household income. Reporting the figures on 5 September, the ABC placed that against 33.3% during the global financial crisis and 37.5% in 1989 — when the mortgage rate was 15.5% rather than the 6.3% of June 2026.

That last comparison is the one worth sitting with. Rates today are less than half what they were in 1989, and the repayment burden is within two percentage points of that peak. The report’s co-author, realestate.com.au senior economist Angus Moore, put the cause plainly: while home prices have fallen this year, they have “grown much faster than incomes”.

One point of precision, because it matters for how you use this with clients. A number of trade headlines called this a record low. The report’s own framing, as quoted in Real Estate Business, is that affordability is at “its lowest since at least 1995” — a statement bounded by the data series, not a claim about all recorded history. Use the bounded version. It is the defensible one.

The state splits reported from the same data are uneven enough to change how you talk to clients depending on where they are buying: South Australia 7%, New South Wales 9%, Western Australia 10%, Victoria 16%. Adelaide, on a median dwelling value reported at $940,000, is now the least affordable state market on this measure.

What Mortgage Choice and Skip launched

On 9 September, The Adviser reported the launch of Mortgage Choice Skip — a white-label home loan funded by non-bank lender Skip and distributed through the Mortgage Choice broker network. The reported terms:

• Lending to up to 98% LVR, with no lenders mortgage insurance charged
• Rates from 6.39% p.a.
• No application, annual or ongoing loan fees
• Owner-occupier and investor borrowers
• Purchases, refinances and cash-out refinances
• Loan amounts to approximately $3.5 million (this figure appears in The Adviser‘s reporting; treat it as that outlet’s number until you see it on a rate sheet)
• Available to Mortgage Choice brokers in NSW, Queensland, Victoria, South Australia and Western Australia, with Skip deploying business development managers to support the rollout

Mortgage Choice chief executive Anthony Waldron framed the target market around buyers without family help, saying the product “gives our network the ability to help borrowers get a ‘yes’ sooner”. Skip co-founder Mario Emmanuel put the pitch this way: “When a borrower has strong earning capacity and a clean credit profile, the size of their deposit shouldn’t stand between them and home ownership.”

Set aside the marketing and the proposition is coherent. It says: we will take the deposit risk if the income and conduct risk is clean. That is a real segment, and every broker reading this has met it — the professional couple on good money, no gifted deposit, priced out of the scheme caps, watching the target move faster than they can save toward it.

Skip is probably already on your panel

The Mortgage Choice launch is the headline, but Skip is not new. The lender rebranded from Sucasa in February 2026, four years after entering the market. It holds Australian Credit Licence 443249 and is an AFCA member. It was co-founded by Mario Emmanuel, Marian Emmanuel and Adam Trouncer, and lists backers including Zigg Capital, 1984 VC, PF Growth and Future Back Ventures.

More to the point for placement: as at Broker Daily‘s reporting on 22 June 2026, Skip was already accessible through LMG, Connective, Outsource Financial and Specialist Finance Group, and had integrated with NextGen’s ApplyOnline. Specialist Finance Group general manager Blake Buchanan described Skip’s approach as bringing “a customer-focused approach and merit-based assessment”.

So if you are not a Mortgage Choice broker, the correct reading of this week is not “a competitor got a product I can’t access”. It is closer to: a lender that has been quietly building panel coverage for months just got a franchise network’s brand on the front of it, and your clients will start asking about 2% deposits. The distribution is broad. The awareness is about to be broader.

At the rebrand, co-founder Adam Trouncer described the 20% deposit as “an ideological handbrake”. Whatever you make of the framing, it is a fair description of where the market has arrived: the deposit convention now excludes people whose income would service the loan comfortably.

“No LMI” is not the same as “no cost”

This is the part to get right, because it is where a good file and a lazy file separate.

Skip’s own published rates page sets out how the structure works. Rather than insuring the high-LVR portion, the loan is split into “a larger Primary Loan (0–80% LVR) and a smaller Secondary Loan covering the remaining portion”, with both components sharing identical rates and terms. Skip also discloses a capitalised rate reduction fee, a $395 valuation fee and a $395 settlement fee, alongside no application, annual or ongoing fees.

Read down the owner-occupier rate card and the economics show up in the comparison rate:

• 90% LVR, Ultra Low Rate: 6.39% p.a., comparison 6.60% — a gap of 0.21%
• 95% LVR, Ultra Low Rate: 6.79% p.a., comparison 7.02% — a gap of 0.23%
• 98% LVR, Ultra Low Rate: 6.39% p.a., comparison 6.74% — a gap of 0.35%

The 98% tier carries the same headline rate as the 90% tier and a comparison rate 14 basis points higher. The gap between headline and comparison is two-thirds wider at 98% than at 90%. Comparison rates are calculated on a standardised basis and will never match a real file, so do not quote them as a client’s cost. But the direction is the useful signal: the cost of removing LMI has not disappeared, it has moved into fees and structure, and the disclosure picks it up.

What APRA already told the market about high LVR

There is a line in APRA’s prudential practice guide on residential mortgage lending, APG 223, that has been sitting there for years and reads very differently this week:

“APRA does not consider the sole use of coverage of loans by LMI as a sufficient control to mitigate high LVR risk.”
Prudential Practice Guide APG 223 — Residential Mortgage Lending

That matters for two reasons, and they point in opposite directions.

First, it undercuts a reflexive objection. If your instinct is “a 98% loan without LMI is unsafe because there’s no insurance”, the prudential regulator’s own position is that insurance was never the control that made high-LVR lending safe. Serviceability assessment and appropriate pricing were. A lender that prices for the risk and assesses income properly is not obviously doing something worse than one that buys a policy.

Second, and more importantly: APG 223 does not apply to Skip. By its own terms the guide applies to “authorised deposit-taking institutions (ADIs) as well as to other APRA-regulated institutions that may have exposures to residential mortgages”. A non-bank lender holding an Australian Credit Licence is neither. APRA’s expectation that ADIs assess with a buffer of at least 3.0 percentage points over the loan rate is a prudential expectation on banks, not a law of nature that binds every lender on your panel.

None of that puts the loan outside regulation. Consumer credit written under an Australian Credit Licence sits under the National Consumer Credit Protection Act, and your own obligations — including the best interests duty — apply in full regardless of who funds the loan. But it does mean the assessment standard behind a 98% approval is the lender’s own, and you should know what it is before you rely on it. Confirm the specifics with your licensee or aggregator compliance team rather than assuming a prudential floor applies.

The file you will need to have written

Best interests duty files do not get tested when the loan settles. They get tested when the client is unhappy, and at 98% LVR the circumstances that make a client unhappy are foreseeable right now: prices are 2.7% below their March 2026 peak, and a borrower who settles at 98% has effectively no equity buffer against a further fall.

That does not make the loan wrong. Plenty of clients are better off owning with a 2% deposit than renting while they save against a moving target — and refusing to present an available option that suits a client is its own BID problem. What it means is that the reasoning has to be on the file, in your words, before anything goes wrong.

Specifically, a defensible file on one of these should show:

• The alternatives you considered and rejected — including government scheme eligibility, which you should establish and record before recommending a private high-LVR structure, and the 95%-plus-LMI route at mainstream lenders
• A total-cost comparison over a realistic hold period, not a rate comparison
• The client’s own stated objectives and priorities — entering the market now versus optimising cost — in their language, not yours
• An explicit note that negative equity risk was discussed, what a further price fall would mean for refinancing or selling, and the client’s response
• How the structure was explained — that this is a split primary and secondary loan replacing LMI, not simply a loan with the insurance waived

The fifth point is the one most likely to be skipped and most likely to matter. A client who understood “no LMI” as “no extra cost”, and later works out what the fee structure was, is a complaint. A client whose file shows you explained the trade and they chose it is not.

What to review this week

1. Check your panel. If you are with LMG, Connective, Outsource Financial or SFG, establish whether Skip is accredited to you, and what accreditation involves. Do this before a client asks, not after.
2. Pull your declined-for-deposit list. Every broker has clients parked because the deposit was short while servicing was fine. That list is the addressable market for this product, and it is the most valuable thing in your CRM this month.
3. Build the comparison once. A single spreadsheet comparing 98% no-LMI against 95%-plus-capitalised-LMI, over five and seven years, will serve you for every one of these conversations. Build it properly once rather than improvising per client.
4. Ask the deposit-source question earlier. Affordability at 12% means the parental-gift question is now the segmentation question. Clients with family help and clients without are in different markets, needing different lenders.
5. Write your standard disclosure paragraph. Draft the plain-English explanation of the split-loan structure and negative equity risk now, run it past your compliance team, and use it consistently.

What to watch next

Three things worth tracking. Whether other franchise networks and aggregators follow with their own branded high-LVR white labels — the Mortgage Choice deal makes that considerably more likely. Whether ASIC takes an interest in how “no LMI” is being marketed to consumers, given the cost has moved rather than vanished. And whether high-LVR non-bank volume grows enough to attract regulatory attention it does not currently receive, given non-banks sit outside APRA’s prudential perimeter.

For now, the practical point stands. The channel spent three years learning to talk about capacity. The constraint has moved to the deposit, the market is building product for it, and the brokers who will handle it well are the ones who work out the cost comparison and the file note this week — before the first client walks in having read a headline about a 2% deposit.