FHBs helping ‘pick up the slack’ amid COVID drag

Minister Sukkar told participants in a webinar hosted by Australian Finance Group (AFG) that in just two months, first home buyers (FHBs) have reserved approximately 65 per cent (6,500) places available in the second phase of the FHLDS.

The minister said this was an encouraging sign, given the ongoing economic fallout from the COVID-19 pandemic.

“[We’re] in the middle of a pandemic [and] Victoria’s suffering a second wave – for 65 per cent of the allotment to be taken up within the first couple of months of the financial year is quite remarkable,” he said.

“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.”

Minister Sukkar went on to dismiss overly bearish forecasts for housing market activity, but acknowledged that demand would remain somewhat subdued, particularly in light of an expected 15-20 per cent reduction in net overseas migration.

“I think the doom and gloom scenario, for a range of reasons, is unlikely to be realised,” he added.

“[But] I think there’s going to be significant pressure on the housing market, with certainly a drop in overseas migration in this financial year, but also confidence more broadly.”

Mr Sukkar said that in his view, migration levels may not pick up until “a quarter or mid-way next year”.

“That’s not informed by any top-secret information, that’s just my sense,” he continued.

“I think you’ve really got to brace yourselves for that 15-20 per cent of net overseas migration this year, which is why I emphasise the First Home Loan Deposit Scheme, and why I think we need first home buyers to pick up some of that slack.”

The minister also acknowledged the role mortgage brokers have played in facilitating FHB transactions, citing figures which revealed that the third-party channel originated 50 per cent of FHLDS loans in the first round of the scheme.  

“We really wanted to make sure that the broker network, to the greatest extent possible, was accommodated in this process,” he said.

“There’s no doubt that the banks were very keen to bring as much of it in-house as they possibly can and use it as an opportunity to try and re-engage face-to-face with those customers, [but] I suspect COVID has made that a lot more difficult, but I suppose it’s made it more difficult for everybody.”

He added: “I’d like [broker share] a touch higher, but there’s an element of banks trying to do a little bit in-house, particularly with these sorts of bespoke programs.”

Both the Finance Brokers Association of Australia and the Mortgage & Finance Association of Australia have previously urged brokers to be proactive with their first home buyer clients.

Applications for the second phase of the scheme require a 2019-20 notice of assessment from the Australian Taxation Office to demonstrate that their taxable income is no more than $125,000 for individuals and $200,000 for couples, as per the eligibility criteria.

[Related: FHB scheme director lauds ‘phenomenal’ brokers]