The government is a step closer to unleashing the home ownership dreams for 10,000 Australians in 2020.
The government has named 27 lenders who have been selected to be a part of the First Home Loan Deposit Scheme.
National Housing Finance and Investment Corporation (NHFIC) confirmed the lenders from a vast pool of applicants to form the first panel to offer guarantee-backed loans for new home buyers.
The National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA) are the only two big banks that are part of the scheme, with 25 non-major lenders on the list as well.
All of the lenders have committed not to charge eligible customers higher interest rates than those who are not part of the scheme.
“The scheme has been deliberately designed to ensure strong representation of smaller lenders on the panel,” Housing Minister and Assistant Treasurer Michael Sukkar said.
“This will promote competition between the large and small banks, and ensure the scheme has broad geographic reach, including in regional and remote communities.”
The make-up of the panel should enable strong activation of mortgage broker channels and promote choice for new property buyers, Mr Sukkar said.
“NAB and CBA will offer guaranteed loans from the scheme’s commencement date of 1 January 2020.
“Consistent with NHFIC’s Investment Mandate, the non-major lenders will receive no less than 50 per cent of the 10,000 guarantees allocated per financial year.”
The Housing Industry Association (HIA) welcomes the list of endorsed lenders, saying it gives first home buyers a genuine choice.
“It’s encouraging to see so many lenders wanting to be involved. Their commitment to offer the same interest rates to participants in the scheme is also critical,” HIA managing director Graham Wolfe said.
“Home ownership provides people with stability in so many aspects of their life. Housing supply needs to remain a national priority to stem the decline in home ownership rates in Australia in the last 25 years.”
Mr Wolfe points out how long it can take to save a 20 per cent deposit, while new property buyers also have to have enough extra cash to overcome barriers, including to cover upfront mortgage insurance costs, stamp duty and securing finance.
“Helping 10,000 first home buyers a year achieve their home ownership dream sooner by providing a guarantee under this scheme to remove one of these added costs will make a real difference,” the MD said.