Deposit Power, a provider of deposit bonds for home purchases, says it has secured an agency agreement with HDI Global Specialty amid rising demand for the product. 

The bonds are used to secure the purchase of a property, instead of providing the traditional 10% in cash. A smaller fee, on average around 1.3% of the deposit amount, is paid for the bond, an insurance policy that acts as a guarantee to the vendor. Then 100% of the property price is paid at settlement. 

Deposit Power says HDI’s A+ credit rating from Standard and Poor’s and AM Best gives confidence to bond customers that the firm is in a strong position to meet its financial commitments. 

The firm says it’s preparing for a surge of new customers as interest rates increase and homeowners see greater value in keeping their cash in the bank. 

Users of the bonds include first home buyers, downsizers looking at an alternative to bridging finance or short-term renting, and purchasers concerned about building companies going into liquidation. 

“They’re seeing this no cash down solution as a safer option,” Deposit Power GM Brent Davidson said. “If the developer goes under, they wouldn’t lose their deposit.” 

The HDI rating will also help other businesses underwritten by Deposit Power such as proptech platform Downsizer.com, it says. 

Deposit Power was started in 1989 and says it’s Australia’s longest-standing deposit bond provider. 

“Bonds are now easily accessible as they are delivered digitally in less than 24 hours with automatic approvals up to $200,000,” Mr Davidson said.