The federal government has added 40,000 new places to the Home Guarantee Scheme from 1 July, a move welcomed by banks.
The Home Guarantee Scheme, formerly known as the First Home Loan Deposit Scheme, was a policy of the previous Coalition government. Run by the National Housing Finance and Investment Corporation (NHFIC), its aim is to shorten the time first home buyers have to save a deposit to buy a home.
The scheme gives first home buyers the opportunity to buy a home with a 5% deposit and avoid paying Lenders Mortgage Insurance.
The new Labor government announced that from today, 1 July, the Home Guarantee Scheme will be expanded to include:
- 35,000 places each financial year to support first home buyers to purchase a home with a deposit of as little as 5% (the First Home Guarantee); and
- 5,000 places each financial year to support single parents with dependents to purchase a home with a deposit of as little as 2% (the Family Home Guarantee).
A range of updated property price caps across Australia will also apply from 1 July, including $900,000 for capital city and regional centres in NSW and $800,000 for capital city and regional centres in Victoria.
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NAB executive home ownership Andy Kerr (pictured above left) said because of the scheme, both younger and solo buyers were getting a foot on the property ladder sooner.
“People going at it alone shouldn’t be disadvantaged and we are seeing the scheme help them buy a property,” Kerr said.
“With a backdrop of house price growth slowing and in Sydney and Melbourne where it is going backwards, there is some relief in sight for first home buyers. Flexible working is providing first home buyers more choice of locations than ever before, with regional purchases in the scheme up two percent compared to the same time last year.”
NAB revealed that its solo buyers purchased 63% of houses in the scheme in the past six months compared to 49% of non-scheme purchases.
It also said that of the 63% of First Home Guarantee solo borrowers, 59% were female and 41% were male. A total of 21% of NAB customers eligible for the First Home Guarantee were under 30, compared to 17% of non-FHG customers.
Kerr said in an uncertain market, it had never been more important to have confidence to buy.
“Getting a fast decision from your bank on a loan is absolutely crucial,” he said.
“Around 50% of our eligible customers can now get a decision within 24 hours and 35% of those are getting unconditional approval within an hour – that’s faster than getting your internet set up in the new home.”
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Great Southern Bank has also welcomed the expansion of the Home Guarantee Scheme.
“Our purpose as a bank is to help all Australians to own their own home – so naturally we are committed to help more people take that step through the Home Guarantee Scheme,” said Great Southern Bank chief customer officer Megan Keleher (pictured above right).
“We expect the First Home Guarantee will continue to be very popular. The good news is that the guarantee has 35,000 places available this financial year, more than three times as many places as were available in its first year.”
Keleher said Great Southern Bank had already helped more than 3,500 customers to buy their homes through Australian government homebuyer support schemes and it planned to help many more under the new model.
The new Labor government said it was committed to introducing a suite of policies to make it easier for Australians to buy a home and deliver more social and affordable housing.
This includes Help to Buy, a new program to make it cheaper and easier for Australians to own their own home, a $10bn Housing Australia Future Fund, which will build 30,000 social and affordable housing properties in its first five years, establishing a National Housing Supply and Affordability Council and developing a new National Housing and Homelessness Plan.