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FHB grants fast-track home ownership by 5 years: CBA

New research has found that customers have bought property on average almost five years earlier using government home ownership schemes.

Data released by the Commonwealth Bank of Australia (CBA) has revealed that its customers have purchased property on average 4.78 years faster using the First Home Loan Deposit Scheme (FHLDS) or the New Home Guarantee (NHG).

Under the FHLDS (New Homes) scheme (also known as NHG), first home buyers (FHBs) seeking to build a new home or purchase a newly built home will be able to do so with a deposit of as little as 5 per cent.

The scheme was recently expanded for a second year, providing an additional 10,000 places in 2021-22.

This is in addition to the 10,000 spots under the FHLDS, which allows eligible FHBs to purchase an established home or a new home with a deposit of at least 5 per cent.

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A further 10,000 places have been opened up under the FHLDS for the 2021-22 financial year, doubling the maximum annual number that was originally available.

As such, the CBA figures have shown that its customers have been able to enter the property market earlier using the FHLDS and the NHG than they would if they had to save for the standard 20 per cent deposit.

State and territory breakdown of average time saved by customers using the FHLDS or NHG showed that NSW and Victorian CBA customers had their deposit saving time shortened the most amid higher average property prices in those markets.

Customers in NSW saved 5.05 years, while average time saved was 4.99 years in Victoria, 4.53 years in the ACT, 4.50 years in Western Australia, 4.42 years in South Australia, 4.20 years in Queensland, 4.11 years in the Northern Territory, and 4.00 years in Tasmania.

The average of saved time was calculated by comparing the time taken to save a 5 per cent deposit to time taken to save a 20 per cent deposit, using estimated post-tax income and actual property purchase price across FHLDS and NHG customers.

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CBA’s findings have come as the major bank opened its waitlist on yesterday (1 July) to new customers seeking to apply for the existing FHLDS or NHG, or the new Family Home Guarantee, which allows single parents with dependent children to purchase or build a property with a deposit of as little as 2 per cent.

The federal government announced the new Family Home Guarantee scheme as part of its 2021-22 budget, which aims to support divorced or separated parents with dependent children by enabling them to purchase a home sooner with a deposit of as little as 2 per cent, starting 1 July.

The government will guarantee up to a maximum of 18 per cent of the property purchase price, allowing the applicant to get a loan without paying lender’s mortgage insurance.

The National Housing Finance and Investment Corporation recently provided details about the property price thresholds for the scheme, confirming expectations that it will duplicate the FHLDS price caps.

Commenting on the data, CBA executive general manager of home buying Michael Baumann said that along with reducing the time taken to save for a deposit, the government housing grants have also helped customers purchase different types of properties in both metropolitan and regional areas.

He said: “Speaking to our lenders and brokers, we know the schemes have been a great success for a wide range of different customers – both singles and couples – looking to realise their home ownership goals across the country.

“We’ve helped customers buy everything from a duplex in Padstow to a townhouse in Umina Beach, an apartment in Coogee, and a newly built home in Box Hill.”

Mr Baumann said that CBA has helped over 6,400 customers purchase their first home sooner.

“We know that saving for a deposit is one of single biggest challenges facing first home buyers and those re-entering the property market,” he said.

“Our data shows CBA customers who have used one of these home buyer initiatives have been able to enter the property market nearly five years earlier on average than they would if they saved for the standard 20 per cent deposit.

[Related: WA FHB loans doubled through pandemic]

FHB grants fast-track home ownership by 5 years: CBA
FHB grants fast-track home ownership by 5 years: CBA
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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