First Home Loan Deposit Scheme

Last week, Prime Minister Scott Morrison announced a new First  Home Loan Deposit Scheme that will enable first home buyers to access a mortgage with a 5 per cent deposit.

This would make 95 per cent loan-to-value ratio mortgages available to first home buyers earning up to $125,000 annually (or $200,000 for couples) from 1 January 2020.

The First Home Loan Deposit Scheme, which will partner with private lenders and prioritise smaller lenders in a bid to “boost competition”, will be available to qualifying first home buyers from 1 January 2020.

The value of homes that can be purchased under the scheme will be “determined on a regional basis, reflecting the different property markets across Australia,” Mr Morrison said.

The Prime Minister estimated that the scheme would help first home buyers save around $10,000 by not having to pay lenders’ mortgage insurance.

Announcing the new loan scheme last week, Mr Morrison said: “It can take nine to 10 years for an average household to save a deposit. We want to help Australians realise the goal of buying their first home by cutting years off the time it takes to save up.

“Our plan for a stronger economy means we can help secure the future of tens of thousands of first home buyers…

“Getting into the housing market is a point of pride for Australians and a rite of passage. It requires hard work and even harder saving, but we want to make it that bit easier.”

He continued: “While our First Home Super Saver Scheme has been about helping boost the savings of first home buyers and making buying a house more affordable, the new First Home Loan Deposit Scheme will help people achieve their goals years earlier.

“We want to help make the dreams of first home buyers a reality.”

The First Home Loan Deposit Scheme will offer up to $500 million in the form of equity through the National Housing Finance and Investment Corporation to focus on improving housing affordability.

*Original content: (Kane, 2019) Mortgage Business "Election 2019: what to expect from the new government"