Over the weekend, the Treasury revealed that the federal government would expand some of its existing schemes to help Australians buy residential property, and launch a new measure that would help more single parents purchase family homes, as part of its upcoming budget for 2021-22.
The government said that it will:
- establish a new Family Home Guarantee with 10,000 guarantees made available over four years to single parents who have a home deposit of at least 2 per cent;
- expand the New Homes Guarantee for a second year, providing an additional 10,000 places in 2021-22 to FHBs seeking to build a new home or purchase a newly built home with a deposit of at least 5 per cent. This is in addition to the 10,000 spots under the First Home Loan Deposit Scheme (FHLDS);
- increase the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme (FHSSS) from $30,000 to $50,000; and
- provide $124.7 million in funding to enable the states and territories to “bolster public housing stocks”, or to meet their social and community housing responsibilities.
While further details of the schemes will be released on Tuesday evening (11 May), lenders on the FHLDS panel have welcomed the new initiatives.
The Customer Owned Banking Association (COBA) applauded the announcements, which it said would “support Australia’s economic recovery and builds on the success of the government’s economic stimulus measures such as HomeBuilder” (which closed for applications last month).
COBA CEO Michael Lawrence highlighted that 20 of the 27 lenders on the FHLDS panel are customer-owned banks, stating: “We commend the government for embedding competition into the successful FHLDS.
“Ensuring the strong representation and prioritisation of customer-owned lenders has led to greater choice and outcomes for consumers.”
CBA and NAB, the only two majors who took part in the FHLDS, also welcomed the government announcement.
Commonwealth Bank of Australia
The CEO of the Commonwealth Bank of Australia (CBA), Matt Comyn, applauded the moves, acknowledging “how challenging it can be for single parents to support their family and save for a deposit for a home”.
“This announcement will come as a welcome relief for hard-working single parents, particularly those working in essential services such as education, healthcare and public safety, looking to buy their first home or re-enter the property market,” he said.
“[T]he new Family Home Guarantee is another way we can help customers own their own home.”
He also welcomed the extension of the First Home Loan Deposit Scheme (New Homes) – also known as the New Homes Guarantee – which will include another 10,000 positions from next financial year.
According to CBA, the bank has so far supported an estimated 5,750 borrowers under the FHLDS scheme.
CBA said that customers are “encouraged to apply for the new Family Home Guarantee, the FHLDS and FHLDS (New Homes) via their CommBank lender or broker from 1 July 2021”.
National Australia Bank
Similarly, National Australia Bank (NAB) said that it was a “strong supporter” of the FHLDS, noting that customer interest in the scheme had been “beyond [its] expectations from day one”.
NAB’s group executive personal banking, Rachel Slade, said NAB had “seen firsthand how it has helped thousands of Australians purchase their first home earlier than they thought possible”.
“We’re excited by the new initiative for single parents, recognising that buying a home is often a major challenge for Australians on a single income,” Ms Slade added.
“We expect the Family Home Guarantee will provide hope and build confidence for single parents to enter, or in some cases re-enter, the property market,” she said.
The NAB executive added that the bank also “strong[ly] supported” the addition of more places for newly built homes.
“There has been significant interest in the New Home Guarantee since it became available late last year,” she said, adding that in less than 18 months NAB had supported 5,500 Australians buy their first home through the FHLDS.
“During this time, first home buyers have entered the market at levels we haven’t seen for a decade,” Ms Slade said, highlighting that FHBs represented around 15 per cent of NAB home loans in the past six months (whereas approximately 9 per cent of its total book is for FHBs).
“We expect this to continue, while also providing a further boost to the construction industry and importantly adding to housing supply,” the group executive for personal banking said, adding that NAB “looked forward to supporting thousands more in partnership with the federal government and NHFIC”.
NAB customers can apply for the FHLDS through branch, telephone and mobile bankers, or brokers.
Further details of the schemes will be included in the upcoming budget, which will be released on Tuesday evening (11 May).
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.