Brokers originate nearly 3/4 of guarantee schemes

The finding comes in the NHFIC’s third annual First Home Loan Deposit Scheme (FHLDS) Trends & Insights Report, covering the financial year 1 July 2021 to 30 June 2022.

The report provides key data surrounding the government home buyer guarantees, comprising the FHLDS, New Home Guarantee (NHG) and Family Home Guarantee (FHG).

According to the report, mortgage brokers have increasingly become the main origination channel for borrowers accessing the scheme.

Broker origination has now increased to 72 per cent of all loans, whilst bank branches and mobile lenders continue to decrease. 

This continues the rapid uptake in origination since the scheme began three years ago.

Brokers made up 48 per cent of originations in 2019–20, which then rose to 61 per cent in 2020–21. 

Branches, the second-highest origination channel, accounted for 38 per cent of loan origination in 2019–20, but this fell to 27 per cent in 2020–21 and then to just 18 per cent in 2021–22. 

Mobile lenders constituted 7 per cent of all loans in 2021–22, and just 3 per cent of recipients used “other” channels. 

The increasing proportion of home buyers accessing guarantee scheme loans through brokers reflects the fact that nearly 70 per cent of all borrowers now use a broker to access a mortgage.

Speaking to The Adviser, Jennifer Chew, the NHFIC's chief program officer for home ownership, said: “The growth in broker-originated loans under the scheme reflects the broader trends in the mortgage market over this period, especially for first home buyers who often seek the support of a broker to guide them through their first buying experience.

"Now originating over 70 per cent of scheme loans, brokers are confident in the benefits of the scheme for their customers," she said. 

Serviceability remains strong

The NHFIC also found that mortgage serviceability has remained relatively stable across the scheme, despite interest rates having started to rise.

There was a marginal increase of 1 per cent in serviceability in 2021–22, ticking up to 28 per cent on average.

The debt-to-income (DTI) ratio ranged from 5.1 to 5.9 times recipients’ combined gross annual income across the schemes, staying in level with last year’s data.

In consideration of borrowers’ repayments, the NHFIC revealed that a majority of recipients (61 per cent) are set to be on schedule with their repayments.

Borrowers who were ahead with their repayments made up nearly two in five, or 39 per cent, equating to 40,000 scheme recipients as of 30 June 2022.

Additionally, just 0.04 per cent of all settled loans (15 guarantees) were 60 or more days in arrears. The report evaluated that “this compares favourably to around 0.13 per cent for the broader LMI (Lenders Mortgage Insurance) market between 2020 and 2022.”

Moreover, average loan-to-value (LVR) ratios saw no change from previous years at 93 per cent for both the FHLDS and NHG, whilst the FHG saw a 96 per cent LVR. 

Chief executive of NHFIC, Nathan Dal Bon, commented on the rising uptake of scheme loans: “The report demonstrates another year of strong demand for the Home Guarantee Scheme, with the Government’s significant expansion of the Scheme enabling more Australians to buy their own home sooner across the cities and regions.” 

[Related: Brokers originated 72% of New Home Guarantees]