Growing difficulty entering the housing market has led to the most first home buyers tapping into the federal government’s Home Guarantee Scheme since its inception four years ago, according to the National Housing Finance and Investment Corporation.
The scheme, which offers three types of guarantees, allows first home buyers to purchase a home with a minimum deposit of 5 per cent to avoid paying mortgage lenders’ insurance. The remaining amount for a 20 per cent deposit – which is required to be exempt from paying the insurance – is guaranteed by the federal government.
The number of first home buyers who used the scheme increased to 45,000 for the 2023 financial year, according to the NFHIC’s fourth annual trend and insights report.
The increase meant almost one in three first home buyers needed access to the scheme to enter the housing market, which is an increase from one in seven in the year prior.
Arrears under the scheme meanwhile have remained at less than 0.1 per cent, which is less than the market average for high LVR (loan-to-value ratio) lending. But the growing cost of living meant the scheme’s arrears were expected to rise in line with the broader home loan market, NHFIC warned.
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