The 5% deposit scheme was a trap and people are only realising now

We talk about negative gearing and rates non-stop, but the 5% deposit scheme crowd is the group I reckon got burned worst.

You put down 5%, bought near the top, and now a small dip puts you underwater. Can’t refinance above 100% LVR, so you’re stuck with your original lender paying whatever they want - no real way out until you’ve clawed back equity.

And the buffer that would normally save you isn’t there. A 20% deposit borrower can ride out a dip on paper and barely notice. At 5%, the same dip wipes out your entire stake and then some. Same market, completely different outcome, purely because of where you started.

It was sold as a leg-up. For a lot of people it just meant buying at the worst possible time with the thinnest possible margin and now they’re trapped in it.