With the non-majors set to start offering loans for the government’s First Home Loan Deposit Scheme from 1 February, brokers are being encouraged to act quick and ensure their clients are getting the best deal.
As 1 February 2020 approaches, the non-major banks chosen as participating lenders in the government’s First Home Loan Deposit Scheme are gearing up to start writing loans under the scheme.
MyState has announced that it is now taking home loan applications for pre-approval under the scheme in anticipation of the start date for non-majors, in just over a week.
According to MyState Bank general manager, banking, Tony MacRae, demand has been strong for the two major banks involved in the scheme – Commonwealth Bank and NAB – since they started taking applications on 1 January 2020.
As such, Mr MacRae is calling on brokers to move quickly if they want to assist their clients in securing one of the 10,000 spots available within the scheme.
“We are urging mortgage brokers to check their customer base and act quickly to submit home loan applications pre-approval for eligible customers now, as places in the scheme are limited and allocated on a ‘first in’ basis,” Mr MacRae said.
“We are now taking applications and aim to submit as soon as we are able to come 1 February,” he said.
Mr MacRae said lower interest rates, loosened serviceability requirements and a positive outlook for future capital growth have all added fuel to the fire of first home buyers excited to seize the opportunity to enter the housing market sooner.
“We expect heightened demand for this scheme to continue, with Australia’s housing market prices predicted for an upswing in 2020, amid further potential rate cuts and a friendlier lending environment relative to previous years,” he said.
For this reason, he called for brokers to be extra diligent when submitting applications under the scheme, which includes guidelines regarding property price thresholds, customer incomes and other criteria.
“Failure to submit supporting documentation as well as any further information required completely and accurately can result in customers missing out on their place, which isn’t a good outcome for either party,” he concluded.
Non-majors sparking competition
Gateway Bank, another non-major participating lender, has also announced that it is accepting expressions of interest for customers looking to secure a place in the scheme.
With non-majors still holding 5,000 of the 10,000 places in the scheme, Gateway Bank head of product and pricing Ryan Holman encouraged brokers and borrowers to apply with the non-majors for a greater chance of obtaining a place in the scheme.
“With 5,000 places available to non-major lenders and only 2,000 further places available for the major banks, customers may be more likely to get a scheme place by choosing a non-major lender.”
Mr Holman also stated that the introduction of the non-majors to the scheme is going to kickstart competitive pricing and encourage even those borrowers who have secured a place in the scheme, to ensure they are getting the best deal.
According to Mr Holman, once the borrower’s place in the scheme is reserved, they can switch lender. However, the 90-day window of reservation following a pre-approval will not reset should the borrower switch.
“If customers have already been pre-approved with one of the major banks, they can transfer their place in the scheme to a more competitive lender,” Mr Holman said.
“Just remember that the date the reservation or pre-approval ends will not reset and, of course, once the places are gone, the next round won’t be available until the next financial year.”
[Related: FHB deposit scheme officially launches]