All non-major FHLDS places now reserved

The FHLDS aims to provide up to 10,000 first home buyers (FHBs) per financial year with access to housing finance with a deposit of at least 5 per cent. Under the scheme, the government guarantees the difference between the borrower’s 5 per cent deposit and the standard 20 per cent deposit required to take out a home loan without paying lender’s mortgage insurance.

A total of 27 lenders are currently on the FHLDS lender panel, with the majors – CBA and NAB – allocated 5,000 of the 10,000 loan spots guaranteed each year, with the other 25 lenders writing the remaining 5,000.

In the past week, lenders such as Auswide Bank and Teachers Mutual Bank have announced that they would no longer be accepting new applications after exhausting their reservation allocation. 

Reservations are held for borrowers for 14 days, during which time they need to organise a finance pre-approval with their lender. Borrowers then have 90 days from the date of pre-approval to find a property and enter a contract of sale (however, a COVID-19 extension may apply). 

The Adviser reached out to the National Housing Finance and Investment Corporation (NHFIC) to understand how many places were still available, and it has now been confirmed that all non-majors have now filled their reservation quota.

According to the NHFIC spokesperson, “The First Home Loan Deposit Scheme places with the non-major lenders have now been reserved for the 2020-21 financial year.”

“Scheme places may become available again when they expire or borrowers withdraw from the scheme,” the spokesperson added.

Similarly, the major banks have also received overwhelming interest in the FHLDS, with both NAB and CBA telling The Adviser that they are currently working through their waitlists (accessible direct or broker) so that any spots that become available are provided to customers on the list.

In August of this year, Minister for Housing Michael Sukkar revealed that 65 per cent of total FHLDS placements were taken up in the first few months of the 2021 financial year, despite ongoing economic uncertainty from the COVID-19 pandemic.

“It just shows that there is resilience in the economy and resilience among the confidence levels of first home buyers and, I suspect, Australians more broadly,” he said.

What happened in the first tranche?

Similarly, according to the NHFIC’s report on the first tranche of the scheme (covering January-June 2020), 60 per cent of all scheme places had been taken up within the first two months of the scheme’s operation.

The report also found that the FHLDS supported one in eight of all first home buyers who purchased a home in Australia between March and June 2020 (or one in six in Queensland and NSW).

Over the first six months of the scheme, and in line with the broader market, almost half (46.1 per cent) of all loans guaranteed originated from a mortgage broker. A further 38.4 per cent originated from typical bank branches, and the remainder came from other sources such as mobile and online lenders, and by telephone.

Excluding the month of January (when only the two major banks were offering FHLDS loans, and only through their proprietary channels), the proportion of mortgage-brokered loans under the scheme was 53.4 per cent. 

On a state and territory level, Western Australia recorded the most (61.9 per cent) guaranteed loans originating with a mortgage broker.

[Related: Brokers dominate FHLDS originations]