The federal government’s 5 per cent deposit scheme has taken a new turn, with specialist lender Liberty Financial becoming the first non‑bank to join the program’s lender panel.
Liberty Financial, a significant player in specialty lending and non‑bank financial services, has been added to Housing Australia’s online list of participating lenders for the federal government’s 5 per cent deposit scheme.
This makes it the first non‑bank invited into the flagship home ownership guarantee.
Liberty Financial is widely known for its focus on borrowers who sit outside standard bank credit boxes, including self‑employed clients, borrowers with non‑traditional income streams, and customers with more complex structures.
It operates across home loans, motor finance and commercial property lending.
The move brings an alternative credit provider into a scheme that now underpins a majority of first‑home buyer (FHB) loans.
The 5 per cent deposit scheme – an expanded evolution of the home guarantee scheme – allows eligible FHBs to purchase with a deposit as low as 5 per cent, and single parents or legal guardians with as little as 2 per cent, without paying lenders mortgage insurance.
The government, via Housing Australia, provides a guarantee that covers the gap between the borrower’s deposit and the usual 20 per cent equity buffer.
On 1 October 2025 income caps were removed, annual place limits were scrapped and property price caps were lifted.
Housing Australia said in March that more than 300,000 Australians had bought or built a home with support from the guarantee.
Almost 60,000 essential workers – including teachers, nurses and emergency services staff – have used the scheme, over 99,000 participants live in regional Australia, about 6,000 single women with dependants have secured homes through the program, and roughly half of all supported buyers are under 30.
Between October and April alone, the expanded scheme backed nearly 40,000 loans – 15,924 single‑borrower and 23,790 joint‑borrower loans – with 13,979 of these going to borrowers above the previous income thresholds.
Nearly 1,000 singles on salaries of at least 200,000 dollars and 1,251 couples earning 275,000 dollars or more accessed the guarantee in that period.
Since its expansion, the scheme has supported 5,670 loans a month while ABS data over the same period showed FHBs overall taking out about 10,181 loans a month, indicating that the majority of FHBs now enter the market through the scheme.
Lender panel now spans majors, mutuals – and a non‑bank
Liberty’s inclusion comes as the lender panel has been steadily widened.
All four major banks participate in the program, following Australia and New Zealand Banking Group’s decision in March to join the scheme.
More than 30 smaller, regional and customer‑owned institutions – such as Bendigo Bank, Bank Australia and various credit unions and mutuals – also offer guaranteed loans.
However, the surge in demand created by the expansion has put pressure on processing times.
Housing Australia has publicly called for more lenders to join the panel – and to sign up for the separate Help to Buy program.
Beyond Bank, for example, temporarily paused its acceptance of pre‑approvals late last year after a surge in applications under the scheme.
The scheme itself has already altered market behaviour.
Recent Equifax trends & insights data has showed that inquiries from FHBs aged 18–25 rose 22.8 per cent since the expansion, the fastest‑growing age group in its analysis, while requests for credit from first‑timers aged 26–35 and 36–45 climbed by 17.4 and 16 per cent respectively.
Price pressures at the lower end
Economists, including those at data firm Cotality, have warned that the expanded guarantee is supercharging demand in the more affordable segments of the market.
Analysis from Cotality has revealed that since the October changes, homes sitting under the new price caps have recorded markedly faster price gains than higher‑priced properties, with under‑cap markets outperforming across almost nine in ten regions.
More to come…
[Related: High-income borrowers crowd into 5% Deposit Scheme]
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