Tag: First Time Buyers

More Details On FHLDS

Via The Adviser.

The Commonwealth Bank of Australia has confirmed that brokers will be able to apply for CBA’s First Home Loan Deposit Scheme loans for their clients from 2 January 2020, while NAB has outlined that brokers will need to wait a while longer.

The federal government’s First Home Loan Deposit Scheme (FHLDS) is due to commence operations on 1 January 2020.

The scheme aims to allow up to 10,000 FHBs per year to get into the property market sooner, requiring just a 5 per cent deposit, yet still giving them access to competitive interest rates and waiving the need for lender’s mortgage insurance (LMI).

The government has agreed to guarantee the difference between the borrower’s 5 per cent deposit and the standard 20 per cent deposit required to take out a home loan without paying LMI.

The initial 27 lenders that will offer FHLDS loans have now been revealed, but questions have been raised regarding broker access to these loans.

It has previously been announced that the two major banks involved in the scheme, NAB and CBA, would be the first two lenders to start accepting applications for the scheme from borrowers, while the other 25 non-major lenders on the lending panel (mainly mutual banks and credit unions) will be accepting applications from 1 February 2020.

Brokers can offer CBA FHLDS loans from 2 January

CBA customers will be able to apply for the scheme via the CBA website and call centres from 1 January. 

However, given that 1 January 2020 is a public holiday, CBA has confirmed that it will make FHLDS loans available to customers on 2 January, via all channels – including branch and broker. 

A Commonwealth Bank spokesperson told The Adviser: “We’re excited that, from 2 January 2020, customers will be able to apply for the First Home Loan Deposit Scheme with Commonwealth Bank through our home loan channels, including brokers. 

“As Australia’s largest lender, we help more Australians buy their first home than any other bank, and its exciting that we can help get more first home buyers into the market under the scheme.”

NAB to offer FHLDS loans online first

However, brokers wishing to write FHLDS loans via NAB will need to wait a while longer before applying, as the bank will be taking a “phased approach”.

According to the bank, eligible customers will be able to apply for the scheme through NAB via its website and call centres from 1 January 2020, as well as through “select direct and retail channels”.

No date has yet been released for full rollout of the FHLDS loans via broker or the wider branch network, but NAB has said it will update broker partners in January with how the phased approach is tracking.

A NAB spokesperson told The Adviser: “It has always been our intention to offer the scheme through the broker channel. However, given the short timeframe between being announced as a participant lender and the go-live date, we’ve needed to take a phased approach to implementation.

“We are working hard to implement the scheme in the broker channel, and across our branch network, as quickly as possible,” the spokesperson said.

The delay will be a blow to brokers looking to write FHLDS loans for their clients, especially given the fact that the scheme is capped at just 10,000 loans per year and the choice of lenders available to brokers is limited.

While Minister for Housing Michael Sukkar commented that the “composition of the panel should also enable strong activation of mortgage broker channels and promote choice for first home buyers”, many brokers have highlighted that many of the smaller/regional lenders (who are expected to take up 50 per cent of the 10,000 loans) are not members of their aggregator’s panel – and therefore brokers would not be able to write loans to these lenders unless they directly accredit with them.

For example, brokers operating under the larger broker groups – AFG, Aussie, Connective, Loan Market and Mortgage Choice – are unable to access more than half of the lenders chosen under the FHLDS, as they are not on the groups’ lender panel (according to the lender panels listed on the groups’ websites). 

These include: Australian Military Bank, Bank First, Bank of us, Community First Credit Union, Defence Bank, G&C Mutual Bank, Indigenous Business Australia, Mortgageport, People’s Choice Credit Union, Queensland Country Credit Union, Regional Australia Bank, The Mutual Bank or WAW Credit Union.

26 lenders announced for First Home Loan Deposit Scheme

Twenty-six additional lenders have been appointed to the initial panel of the government’s First Home Loan Deposit Scheme, including major bank, Commonwealth Bank. Via The Adviser.

The National Housing Finance and Investment Corporation (NHFIC) has announced its full panel of lenders taking part in the federal government’s First Home Loan Deposit Scheme (FHLDS).

Following on from the announcement that NAB had been chosen as the first major lender for the panel, CBA has been named as the second major bank to offer loans under the scheme, along with 25 non-major lenders.

The participating lenders will have the ability to write loans for first-home buyers (FHBs) who have saved deposits as little as 5 percent, with the government set to guarantee the rest of the deposit under the FHLDS.

CBA and NAB will reportedly be able to issue up to 50 per cent of the 10,000 annual guaranteed loans provided per financial year, according to the NHFIC Investment Mandate.

The two major banks will be accepting applications for the scheme from 1 January 2020.

The other 50 per cent of guaranteed loans will be written by the other non-major lenders on the NHFIC lending panel.

The non-majors will be taking applications from 1 February 2020.

The full list of lenders on the panel, along with NAB and CBA, are as follows:

  • Australian Military Bank
  • Auswide Bank
  • Bank Australia
  • Bank First
  • Bank of us
  • Bendigo Bank
  • Beyond Bank Australia
  • Community First Credit Union
  • CUA
  • Defence Bank
  • Gateway Bank
  • G&C Mutual Bank
  • Indigenous Business Australia
  • Mortgageport
  • MyState Bank
  • People’s Choice Credit Union
  • Police Bank (including the Border Bank and Bank of Heritage Isle)
  • P&N Bank
  • QBANK
  • Queensland Country Credit Union
  • Regional Australia Bank
  • Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)
  • Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
  • The Mutual Bank
  • WAW Credit Union

Applications for the scheme will begin on 1 January 2020, and can be made either directly to participating lenders, or via the broker channel. The NHFIC will not be taking any direct applications.

According to the NHFIC, members of the panel have been chosen on the basis of competitiveness of offerings, geographic reach, customer care, and their ability to meet the deadline for the implementation of the scheme.

Further, the NHFIC and federal Minister for Housing and Assistant Treasurer Michael Sukkar have stated that 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.

Panel will ‘enable strong activation of mortgage broker channels’

Commenting on the news, the federal Minister for Housing and Assistant Treasurer, Michael Sukkar, commented: “The Morrison Coalition Government is committed to helping make home ownership a reality for more Australians and to get them into the property market sooner.

“Today, the government welcomes confirmation from the National Housing Finance and Investment Corporation (NHFIC) that 27 lenders have been selected, from a wide pool of applicants, to form the initial panel offering guarantee-backed loans under the First Home Loan Deposit Scheme.

“The National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA), together with 25 non-major lenders have been appointed as participating lenders in the Scheme.

“Importantly, all lenders have committed not to charge eligible customers higher interest rates than equivalent customers outside of the scheme,” he said.

Mr Sukkar continued: “The scheme has been warmly welcomed by major industry peak bodies, and the composition of the initial lending panel reflects the industry’s confidence in the Morrison Coalition Government’s plan to assist first home buyers.

“Further, the scheme has been deliberately designed to ensure strong representation of smaller lenders on the panel. This will promote competition between the large and small banks, and ensure the Scheme has broad geographic reach, including in regional and remote communities.

“The composition of the panel should also enable strong activation of mortgage broker channels and promote choice for first home buyers,” he concluded.

NAB To Offer Government FTB Mortgages

NAB has announced it will be taking part in the government’s first home loan deposit scheme, operational from 1 January 2020. Via Australian Broker.

The bank has been selected by the National Housing Finance and Investment Corporation (NHFIC) to offer mortgages under the scheme.

“We are proud to be chosen to partner with the federal government and NHFIC,” said Mike Baird, NAB chief customer officer of consumer banking.

“Every year our bankers help more than 15,000 Australians achieve their dream of owning their first home. This scheme is a fantastic way of helping even more customers, allowing them to potentially save thousands of dollars on their mortgage.”

The scheme will provide 10,000 eligible Australians per year access to a home loan with a deposit of as little as 5%. To implement the scheme, the NHFIC will contract with a panel of selected lenders rather than having direct contact with borrowers.

Before offering the guaranteed loans, lenders will need to update their internal systems and train front-line lending staff on how to apply the scheme eligibility criteria alongside regular considerations, such as loan serviceability.

The NHFIC has communicated key considerations in its selection of lender partners includes the loan products on offer, including interest rates and other fees, as well as the quality of the customer experience.

According to Baird, NAB is the only major to have a special rate for first homebuyers, which is currently 2.88% fixed for two years. The major bank also emphasised it will not charge eligible customers higher interest rates than equivalent customers outside of the scheme.

“We see this appointment as a great endorsement of NAB’s home loan offering and our support of Australians looking to buy their own home for the first time,” said Baird.

Before the scheme is live in the new year, customers are able to check their potential eligibility on the NHFIC website.

More On The First Home Owner Bribe [Podcast]

We look at the details outlined in the new Federal Government scheme to assist First Time Buyers.

https://www.treasury.gov.au/sites/default/files/2019-10/c2019-23295-nhfic-explanatorystatement.pdf

https://www.treasury.gov.au/consultation/c2019-23295

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
More On The First Home Owner Bribe [Podcast]
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Wanted First Time Buyers – Your Country Needs You!

Property expect Joe Wilkes and I discuss the latest New Zealand data, and consider the drive to attract first time buyers in both NZ and Australia. What does the data say?

See the RBNZ May Financial Stability report.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Wanted First Time Buyers – Your Country Needs You!
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Unnatural Acts As Advertised

We discuss the Coalition plans for first time buyers. As expected. Sound of can being kicked down the road! Remember such incentives lift prices, and will “bribe” people into a falling market.

One of the new announcements in today’s launch was the Coalition’s commitment to helping first home buyers save for a deposit sooner by lowering the required deposit from about 20 per cent to 5 per cent.

At the moment above 70% or 80% borrowers at the moment would need to purchase expensive Lenders Mortgage Insurance.

Today the Coalition announced a scheme, where eligible first home buyers would not have to pay mortgage insurance and instead, the Government would guarantee the difference between that lower deposit (down to 5 per cent) and the industry standard (about 20 per cent).

The First Home Loan Deposit Scheme, will be available from January 1 for those who have saved at least 5 per cent of the value of the home, but it will also be subject to limits for each market

The full details of the scheme have not yet been released, but Mr Morrison said it was aimed at allowing people to get onto the property ladder sooner.

The Labor Party has responded by promising to match the Coalition proposal.

“We back genuine support for first home buyers — that’s why we are also reforming negative gearing for future purchases, so young Australians don’t have to keeping losing out to wealthy property speculators,” Shadow Treasurer Chris Bowen said.

After six years of failure, and six days before an election, the Liberals are desperately trying to tell young Australians they understand their struggles to buy their first home,”

The government proposal is a significant departure from previous attempts to help younger people trying to get into the housing market, requiring $500 million in guarantees and possibly more over time.

But it will not be open-ended. The government intends to borrow $500 million so it can invest the money in the National Housing Finance and Investment Corporation, which would offer the guarantees to aspiring home-owners.

The $500 million cost of the policy does not deepen the budget deficit or weaken future surplus for either major party. As an investment, it will be treated as a capital item rather than expenditure.

The scheme would be capped at 10,000 loans every year, about one tenth of the market given estimates that there were about 100,000 loans to first-home buyers last year.

The scheme will be available to first home buyers with an income of up to $125,000 or a couple with $200,000 where they are both first-home buyers.

So, lets encourage first time buyers to come into a falling market, and loose their equity some more.

Households Not Banking On Property

We have released the latest edition of our household surveys, looking specifically their attitude to property transactions and expectations. And overall demand, and intention to transact have tanked. More evidence of a weaker market ahead.

Our video provides a complete analysis of the results, but here are the main points.

Intention to transact continues to fall, as property investors continue to step away from the market. Down Traders and First Time Buyers remain active, as do those seeking to Refinance; but overall expect lower numbers of transactions ahead.

As a result, demand for credit is also likely to fall further, as investors walk. Up Traders and First Time Buyers are the main cohorts likely to want a loan, plus some refinancing.

Home price expectations are diving, across all segments, these are the lowest results I have ever seen in the data series. This is a significant shift compared with even 18 months ago. People think property is likely to fall further.

Looking at the barriers to transacting, there are some common themes emerging. Those wanting to buy are being constrained by the lack of available finance. Rising costs of living are also not helping.

First Time Buyers are also finding getting a loan tougher as underwriting standards have tightened. High prices as a barrier have slid a little.

Down Traders are seeking to release equity before prices slide further. This is a big cohort and they are becoming more desperate to sell.

Investors are less convinced by future capital appreciation. Its mainly now tax efficiency which they cling to. Some will be forced to sell, but many are sitting on the sidelines and waiting to see how this plays out.

And barriers now include concerns around regulatory changes and finance avaliability.

So in summary there is nothing here which suggests any type of recovery in home prices. The collapse in prices has already been sufficient to put many households off from future purchases, and those who need finance are finding it hard to get funds. More falls to come.

Nothing here changes our scenarios. More falls. Period.