NHFIC releases Family Home Guarantee price caps

The National Housing Finance and Investment Corporation has provided details about the property price thresholds for the federal government’s Family Home Guarantee scheme, confirming expectations that it will duplicate the First Home Loan Deposit Scheme (FHLDS) price caps.

The Family Home Guarantee scheme (designed to assist single parents purchase property) formed a part of three measures targeting home ownership in the 2021-22 federal budget released in May.

Starting on 1 July 2021, the new guarantee aims to support divorced or separated parents with dependent children by enabling them to purchase a home with a deposit of as little as 2 per cent. Applicants can be a first home buyer (FHB) or previous owner-occupiers who do not currently own a home. However, applicants who have a freehold interest in real property in Australia, a lease of land in Australia, or a company title interest in land in Australia will not be eligible.

Applicants must be Australian citizens, at least 18 years of age and have an annual taxable income of no more than $125,000. Child support payments will not be included as income for the purpose of the income cap.

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

The scheme – which will act in a similar way to existing government guarantee schemes – will provide 10,000 guarantees over four years to single parents with dependents.

Eligible residential properties include an existing house, townhouse or apartment, a house and land package, land and separate contract to build a home, and an off-the-plan apartment or townhouse.

Property price caps under the scheme

According to the NHFIC, which is administering the scheme on behalf of the Australian government, the price caps differ in capital city and regional centres, and the rest of the states, similar to the FHLDS.

The price cap in capital city and regional centres is $700,000 in NSW ($450,000 across the rest of the state), $600,000 in Victoria ($375,000 across the rest of the state), $475,000 in Queensland ($400,000 across the rest of the state), $400,000 in Western Australia ($300,000 across the rest of the state), $400,000 in South Australia ($250,000 across the rest of the state), and $400,000 in Tasmania ($300,000 across the rest of the state).

The ACT has a price threshold of $500,000 while in the Northern Territory, the price cap is $375,000, the NHFIC said.

Eligible single parents will be able to apply for the Family Home Guarantee through an FHLDS participating lender.

NHFIC said that it does not accept applications directly and does not maintain a waiting list for places, including for the additional guarantees to be made.

NHFIC issues first sustainability bond

The NHFIC has finalised its first sustainability bond at $343 million, with the issuance more than two times oversubscribed, it announced.

It said that the funds raised from the bond will directly support the delivery of over 1,100 new homes across Melbourne, as part of the NHFIC’s involvement in a Community Housing Limited (CHL)-driven Building Communities consortium.

The funds raised from this bond will support the delivery of around 600 social homes, 450 affordable and private rental homes, and 50 supported disability accommodation across sites in Brighton, Flemington and Prahran, the NHFIC said.

The AAA-rated government-guaranteed bond has marked NHFIC’s first sustainability bond and its longest tenor bond, the NHFIC said.

It will provide a fixed rate of 2.335 per cent for 15-year interest-only loans to CHL, which it said would save CHL around $50 million in interest payments and provide a return to CHL of around $200 million over the 40-year life of the project.

The NHFIC said that these funds are available to be reinvested into more social and affordable housing.

The NHFIC thanked joint lead managers ANZ, the Commonwealth Bank of Australia, Deutsche Bank, UBS, and Westpac for helping NHFIC deliver its first bond issuance.

Find out more about the top property and home buying trends in your local area at the Better Business Summit 2021. Places are limited so make sure you secure your place at the five-state event asap!

[Related: NHFIC provides $400m for Vic social housing]

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.