Home Guarantee spots remain vacant amid serviceability crunch

While the places for the three schemes — which include the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee — were increased to 50,000 on the back of high uptake and low-interest rates, this year has been a little more sluggish as serviceability constraints persist.

On the back of 11 cash rate hike increases (and with the RBA flagging more hikes are likely), banks have been introducing new serviceability assessments and clawing through their applications with a fine-tooth comb.

As such, the process to get into the Home Guarantee schemes has been made a little more challenging this financial year, according to Organic Home Loans broker, Jack Fouracre.

“I’m having a lot of conversations with people now that they just can’t proceed purely based on borrowing capacity,” Mr Fouracre said.

“It’s a shame — it’s a massive barrier right now, people can’t even refinance, or can’t even do a purchase that they want,” he explained, as the rising cash rate and APRA’s 3 per cent serviceability buffer hold borrowers back.

Home Guarantees expand

The government recently opened up the eligibility criteria to allow more people to apply.

Ahead of the federal budget, the Minister for Housing, Julie Collins, announced it will be expanding the criteria to allow more people to apply.

Under the program, permanent residents, cohabiting friends, and previous homeowners will be eligible to apply, as well as single guardians (under the Family Guarantees), effective 1 July 2023.

Up until now, the schemes were limited to Australian citizens, however, permanent residents will also be eligible to apply. In addition, friends, siblings, and other family members can apply under joint applicants, alongside de facto relationships.

The scheme also expanded the pool of applicants beyond ‘first home buyers’ to include previous property owners who haven’t owned in the past 10 years.

The National Housing Finance Investment and Investment Corporation (NHFIC), which manages the government program is yet to disclose the latest figures on the program’s uptake.

“We don’t have figures available at the moment, but hope to have an update in the next week or so,” a spokesperson told Mortgage Business.

However, National Australia Bank (NAB), which has helped over 20,000 first home buyers secure their home since the schemes kicked off in 2020, said the bank was “on track to fill most of our allocated places” by mid-June 2023.

“We’re still seeing strong demand from first home buyers and are supportive of measures to expand the program, which will help get more first home buyers into homes faster,” executive (home ownership)," Andy Kerr, said.

“We’re working closely with relevant stakeholders to ensure we’re ready for the program’s expansion on 1 July.”

From 1 July, the program will reopen to the new expanded criteria offering 35,000 places per year across the First Home Guarantee, 10,000 places per year under the Regional First Home Buyer Guarantee, and 5,000 places per year under the Family Home Guarantee.

In April 2023, the government announced 2,997 households had taken advantage of the Regional First Home Buyer scheme, which marked its first six months of the scheme opening in October 2022.

With 10,000 places opened for the scheme each year, this could signal more than two-thirds are left available six months in.

Mr Fouracre said several BDMs had indicated there are plenty of places available, encouraging applications before the financial year comes to a close.

“I found that last year they ran out of spots quite quickly, [but] this financial year, they’ve got heaps of spots left,” Mr Fouracre said.

“I’ll be interested to see if they run out of spots because still today we’re almost at the end of the financial year and there’s [places] available.”

Mr Fouracre said it was important for borrowers to speak to a broker to find the best solution, whether it be to consolidate debt, refinance, or plan for the future.

[Related: Home Guarantee scheme to expand from 1 July]