Westpac-owned St George Bank has reduced the cost of Lenders Mortgage Insurance (LMI) to just $1 for eligible first home buyers.

The bank says the move paves the way for Australians to buy their first home with a 15% deposit instead of the traditional 20%.

Generally, a family home with a property value of $650,000 would incur more than $6000 in LMI charges on deposits under 20%.

“This is not an LMI waiver,” a spokeswoman told insuranceNEWS.com.au. “The LMI charge is being lowered to $1 for eligible customers, with St George covering the rest of the cost of LMI to assist customers with their upfront costs, while at the same time reducing lending risk.”

The offer is available for owner-occupier first home mortgages with principal and interest repayments on loans of up to $850,000 against properties worth up to $1 million and a loan-to-value ratio of 85% at the time of mortgage approval.

The LMI St George customers buy is issued either by either Westpac or by another LMI insurer.

One in 10 Australians looking to buy a home are doing so for the first time, the bank says.

Borrowers with a deposit of 20% of the property value generally avoid paying LMI, which covers the bank from loss if borrowers can’t repay their home loan and is a one-off payment based on the amount borrowed and the size of the deposit.