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First lender for FHB deposit scheme announced

by Hannah Dowling5 minute read
FHB deposit scheme

The NHFIC has announced one of the two major banks to be appointed to the lending panel for the federal government’s first home loan deposit scheme.

National Australia Bank (NAB) has been announced as the first lender to join the National Housing Finance and Investment Corporation’s (NHFIC) lender panel under the federal government’s First Home Loan Deposit Scheme (FHLDS).

NAB will be one of two major banks on the panel that will be writing loans for first home buyers (FHBs) who have saved deposits as little as 5 per cent, with the government set to guarantee the rest of the deposit.

It is thought that the scheme could save FHBs thousands of dollars in lender’s mortgage insurance (LMI).

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In an attempt to promote competition, the two major banks will reportedly only be able to issue up to 50 per cent of the 10,000 annual guarantees per financial year, according to the NHFIC’s Investment Mandate.

The second major bank and non-major lenders joining NAB on the panel are yet to be announced.

According to the NHFIC, members of the panel will be chosen on the basis of competitiveness of offerings, geographic reach, customer care, and their ability to meet the deadline of 1 January 2020 for the implementation of the scheme.

Further, the NHFIC and federal Minister for Housing and Assistant Treasurer Michael Sukkar have stated that NAB, along with other members on the lending panel, will not be able to charge eligible customers higher interest rates than equivalent customers outside the scheme.

Additional lenders may be “periodically” added to the panel after the scheme has launched, according to the NHFIC.

The FHLDS is due to commence on 1 January 2020, with applications accepted through the broker channel or directly through participating lenders, as the NHFIC will not accept applications directly.

Commenting on the announcement, Minister Sukkar said the goal of the scheme is to make home ownership a reality sooner for Australians.

“The First Home Loan Deposit Scheme has been specifically designed to support first home buyers purchase a modest home, getting them into the property market sooner,” he said.

“The scheme has been warmly welcomed by major industry peak bodies, as well as a broad spectrum of lenders, and it is great to have NAB on board.”

Mike Baird, NAB’s chief customer officer, consumer banking, said the bank is proud to be chosen as an initial lender in the scheme.

“This scheme is a fantastic way of helping even more customers, allowing them to potentially save thousands of dollars on their mortgage,” Mr Baird said.

[Related: Government sets price caps for FHB scheme]

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Hannah Dowling

Hannah Dowling

AUTHOR

Hannah Dowling is a journalist for The Adviser and Mortgage Business.

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