FHB scheme lender panel revealed

The National Housing Finance and Investment Corporation (NHFIC) has announced its full panel of lenders that will have the ability to write loans for first home buyers (FHBs) as part of the federal government’s First Home Loan Deposit Scheme (FHLDS).

Following on from the previous announcement that NAB had been chosen as the first major lender for the panel, the Commonwealth Bank of Australia has been named as the second big bank to offer loans under the scheme, along with 25 non-major lenders.

The participating lenders will have the ability to write loans for FHBs who have saved deposits of at least 5 per cent, with the government set to guarantee the difference under the FHLDS.

According to the NHFIC, members of the panel have been chosen on the basis of competitiveness of offerings, geographic reach, customer care, and their ability to meet the deadline for the implementation of the scheme.

The two major banks will be allowed to issue no more than 50 per cent of the 10,000 annual guaranteed loans per financial year, as specified in the NHFIC Investment Mandate.

The other 5,000 loans will be written by the non-major participating lenders. These include: Australian Military Bank, Auswide Bank, Bank Australia, Bank First, Bank of us, Bendigo Bank, Beyond Bank Australia, Community First Credit Union, CUA, Defence Bank, Gateway Bank, G&C Mutual Bank, Indigenous Business Australia, Mortgageport, MyState Bank, People’s Choice Credit Union, Police Bank (including the Border Bank and Bank of Heritage Isle), P&N Bank, QBANK, Queensland Country Credit Union, Regional Australia Bank, Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd), Teachers Mutual Bank Ltd (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank), The Mutual Bank and WAW Credit Union.

The two major banks will begin taking applications from FHBs for loans under the scheme from 1 January 2020, with most other lenders taking in their first applications as of 1 February.

Following the announcement, the lenders involved have welcomed their participation in the scheme, as it allows for them to facilitate FHBs getting into the market quicker and easier.

Many lenders recognised the difficulties that FHBs currently face due to sheer amount of time it takes to save up a deposit of 20 per cent.

Earlier this week, APRA announced that FHLDS loans would be assigned a risk weighting the same as any other loan with a full 20 per cent deposit.

Participating lenders welcomed the fact that such a risk weighting allows them to offer FHBs a competitive interest rate, with lenders in fact obliged to offer FHBs the same interest rate as other borrowers with a full deposit.

Mutuals taking charge

Notably, the vast majority of lenders included on the panel are mutual banks and credit unions.

The Customer Owned Banking Association (COBA) welcomed this fact, stating that the inclusion of so many customer-owned banking institutions highlighted the importance of the sector in providing options and competition for borrowers in the home loan market.

COBA CEO Michael Lawrence said: “Customer-owned banking institutions are excited to work with the federal government to help more Australians enter the property market.

“We appreciate the government’s commitment to competition and choice by ensuring smaller lenders are so well represented in the scheme.”

Additionally, Melinda Morrison, CEO of the Business Council of Co-operative and Mutuals (BCCM), said there is an important relationship between mutual banks and home lending, which is recognised in their presence on the NHFIC panel.

“Home lending is core business for mutual banks, credit unions and building societies from their inception, being formed to address access to affordable lending in the first place,” Ms Morrison said. 

She continued: “We know that member-owned businesses are not conflicted between shareholder and customer interests because they are customer-owned institutions. Borrowers can be assured their needs will always come first.”

CUA CEO Paul Lewis said: “As a mutual, we are pleased to see the scheme has been designed to promote competition in banking.

“Half of the 10,000 loans available will be allocated to non-major lenders, including those in the mutual sector,” Mr Lewis said.

He noted that CUA would be holding off on receiving applications for the scheme until March 2020.

Defence Bank CEO David Marshall said: “Our unique Defence membership means we attract a disproportionally high number of younger men and women right across Australia, many who are looking to buy their first home. 

“FHLDS will be another way in which Defence Bank can support the men and women of the defence community.” 

Sydney-based mutual Gateway Bank also welcomed its inclusion on the panel, with head of products and pricing Ryan Holman stating: “Gateway Bank has always supported a fair system for first home buyers, and the First Home Loan Deposit Scheme is the ideal platform to help these Australians get into their home sooner.”

The scheme will officially launch on 1 January 2020, and applications can be made either directly through participating lenders, or via the broker channel. The NHFIC will not be taking any direct applications.

[Related: New eligibility tool launches for FHB deposit scheme]