Government looks to add more majors to Home Guarantee Scheme panel

Currently, just the Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) are on the major bank panel for the government’s First Home Guarantee (FHBG) and the Family Home Guarantee (FHG) schemes administered by the NHFIC. Thirty non-major lenders are also part of the Home Guarantee Scheme.

After amendments were made to the NHFIC’s Investment Mandate recently — which removed the limit of having only two major bank lenders on the lender panel — the corporation has now launched a request for proposal process providing the opportunity for Australia and New Zealand Banking Group (ANZ) and Westpac Banking Corporation (Westpac) to join.

It said that adding more major banks to the panel would “provide home buyers with more choice of lenders and accessibility” to the scheme. The move does not impact NHFIC’s current panel of major bank and non-major bank participating lenders.

How the process works

ANZ and Westpac have until 12 August to put forward a proposal.

An NHIC Evaluation Committee will then review the proposal against a range of evaluation criteria, including details of the banks’:

• Customer care (including hardship) 
• Product competitiveness, including fees and interest rates
• Operational process including risk management 
• Reputation
• Ability to promote market competition in lending and related markets
• Capacity and readiness to implement and promote the Scheme on and from 30 September 2022
• Potential to minimise calls on the Guarantee
• Legal and contractual compliance. 

The NHFIC said that it also has “preferred lender attributes” that will be considered favourably by the Evaluation Committee when assessing proposals, which relate to the lender’s:

• Customer base (the geographical location and key workers occupations) 
• Commitment and capacity to deliver both FHBG and FHG 
• Capacity to evolve to accommodate any future schemes that may be introduced by the government; and
• Ability to offer competitive high loan to value ratio (LVR) loan products. 

A decision to appoint any new lenders to the panel is expected in “early September”.

If ANZ and Westpac are successful in having their proposal accepted, they would be required to offer the First Home Guarantee, the Family Home Guarantee from 30 September 2022.  

Moreover, they will also be expected to deliver any other guarantees that may be added in the future by the government (for example, the anticipated Regional Home Guarantee).

What the Home Guarantee Schemes entail

On 1 July 2022, 40,000 new place became available under the different guarantee schemes available.

The number of places available through the First Home Guarantee has now increased to 35,000 per financial year, while the Family Home Guarantee has an annual allocation of 5,000 places from 1 July 2022 until 30 June 2025. 

Property price caps and the number of lenders offering the scheme have also increased this year, offering home buyers broader choice.

For the 2022–23 financial year, NHFIC said it anticipates doubling the number of scheme places to up to 50,000, including 10,000 places in the Federal Government’s announced Regional First Home Buyer Support Scheme.

[Related: Expanded Home Guarantee Scheme launches]