40,000 new places open up under Home Guarantee Scheme

The Home Guarantee Scheme comprises the First Home Guarantee (FHBG) – previously known as the First Home Loan Deposit Scheme – and the Family Home Guarantee (FHG). 

It allows eligible first home buyers to buy a property with a deposit as small as 5 per cent – and eligible single parents with a deposit as small as 2 per cent, while the government guarantees the remaining amount (15 per cent and 18 per cent of the property price, respectively, avoiding the need for lenders mortgage insurance [LMI]). 

The number of places available through the First Home Guarantee has now increased to 35,000 per financial year, while the Family Home Guarantee will have an annual allocation of 5,000 places from 1 July 2022 until 30 June 2025. 

Property price caps and the number of lenders offering the scheme have also increased this year, offering home buyers broader choice.

The scheme, which is administered by the National Housing Finance and Investment Corporation (NHFIC), has so far helped more than 61,000 Australians purchase, or build a home. 

It is expected that an additional 10,000 places will also become available in the year ahead, once the Labor government’s commitment to introduce a Regional First Home Buyer Support Scheme is implemented.

NHFIC chief executive Nathan Dal Bon welcomed the increase of Home Guarantee Scheme places by the Australian government: “As an organisation, we support Australians across the housing spectrum from those renting in community housing, through to Australians with the goal of homeownership. 

“We expect many more Australians to be able to bring forward buying a home under the expanded Scheme.” 

Several lenders have welcomed the opening up of the scheme on the first day of the financial year, with NAB’s executive home ownership, Andy Kerr, outlining that the scheme had helped both younger and solo buyers get a foot on the property ladder sooner.

He revealed that NAB solo buyers purchased 63 per cent of houses in the scheme in the past six months compared to 49 per cent of non-scheme purchases.

Of the 63 per cent of First Home Guarantee solo borrowers, 59 per cent were female and 41 per cent were male.

Mr Kerr commented: “People going at it alone shouldn’t be disadvantaged and we are seeing the scheme help them buy a property.

“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 2 per cent compared to the same time last year.

“In an uncertain market, it has never been more important to have confidence to buy. Getting a fast decision from your bank on a loan is absolutely crucial,” suggesting that around half of eligible customers can now get a decision on their application within 24 hours.

Angus Sullivan, the group executive of retail banking at CBA (the other major bank involved in the scheme), said the additional places would help even more Australians realise their property ownership ambitions.

“We understand our customers are facing rising cost of living pressures, so the release of additional places is welcome news as it will help more customers achieve their property ownership dreams sooner rather than later, with some only needing a deposit of as little as 2 per cent,” he said.

Great Southern Bank’s chief customer officer, Megan Keleher, also commented: “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.

“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. 

“At the same time, the Family Home Guarantee helps single parents with a dependent child, which is another group that often faces challenges in saving a deposit to buy a home.

“We’ve already helped more than 3,500 customers to buy their homes through Australian Government homebuyer support schemes, and we plan to help many more under the new model.”

[Related: 85% of Family Home Guarantee supplied to single mothers]