P&N Bank has revealed that it will cease participating in the federal government’s Home Guarantee Scheme (HGS) from 31 May.
The lender said that it would not accept any new loans under the scheme from the end of this month, but that it would continue to service existing customers under the scheme following this date.
Speaking with Mortgage Business, Kerrie Nayler, P&N Group’s senior manager of corporate affairs, revealed that the lender would be exiting the scheme due to “operational factors” including a “drive for simplicity”.
Nayler also reiterated that the decision would have no impact on existing customers.
She commented: “The decision was based on a number of operational factors, including a drive for simplicity, so from 31 May 2024, new loans will no longer be accepted as part of the HGS.
“There will be no impact to existing customers within the scheme.”
The senior manager said that the group would remain committed to supporting first home buyers and would “continue to evolve its FHB proposition”.
It has reportedly supported more than 1,000 first home buyers (FHBs) into home ownership under the scheme.
What is the Home Guarantee Scheme?
The Home Guarantee Scheme is a government scheme that aims to enable home buyers to purchase a home with a small deposit without needing to pay lenders mortgage insurance (LMI).
It includes the First Home Guarantee (which allows FHBs to purchase a home with a 5 per cent deposit), the Regional First Home Buyer Guarantee (allowing regional FHBs to purchase a property with a 5 per cent deposit), and the Family Home Guarantee (which allows eligible single parents or guardians to purchase a home with a 2 per cent deposit).
The scheme is available through a panel of more than 30 lenders (now excluding P&N).
Housing Australia administers the scheme on behalf of the Australian government and provides participating lenders with a guarantee of up to 18 per cent (dependent on the scheme the borrower is part of), negating the need for borrowers to pay LMI.
Eligibility for the scheme is dependent on income thresholds and property price caps that differ by state.
[Related: Shadow treasurer slams Help to Buy, pushes super for housing]