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More than half of FHLDS loans and nearly three-quarters of New Home Guarantees were originated by brokers in the financial year 2021, a “dramatic increase” on the prior year, according to the NHFIC.
The National Housing Finance and Investment Corporation (NHFIC) has released its second annual First Home Loan Deposit Scheme (FHLDS) Trends & Insights Report, which contains key findings from the FHLDS and New Home Guarantee (NHG) schemes for the financial year 1 July 2020 to 30 June 2021.
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These government-backed initiatives aim to support eligible home buyers (those earning under $125,000 or $200,000 as a couple) in purchasing their first home sooner by reducing the amount of deposit required to access a home loan without having to pay lenders mortgage insurance (LMI). Instead, the NHFIC guarantees the scheme lenders up to 15 per cent of the value of the property financed by an eligible first home buyer’s home loan.
According to the report, the proportion of loans originating from the broker channel “dramatically increased over the last 12 months”.
Brokers wrote 56 per cent of the 10,000 FHLDS guarantees in FY21, up from 48 per cent in the previous year. The scheme was heavily oversubscribed when it reopened in July 2020, with most places filling by September 2020.
Around 30 per cent was written in bank branches, 9 per cent by mobile lenders and 5 per cent through “other” channels.
Meanwhile, 72 per cent of the 10,000 NHGs in FY21 were originated through the third-party channel. The New Home Guarantee commenced on 2 November 2020.
Just 18 per cent were written via bank branches, 8 per cent by mobile lenders and 2 per cent by “other” means.
The NHFIC has suggested that the increase in broker traffic was “most likely driven by COVID restrictions”.
However, feedback from lenders who were actively participating in the schemes suggested that broker participation was now in line with broker proportions across the lenders’ wider loan portfolio.
Jennifer Chew, director of the FHLDS at NHFIC, commented: “Brokers have been important to the success of the schemes and the proportion of FHLDS and NHG loans originating from broker channels continues to grow.
“Last financial year, brokers originated more than half of FHLDS loans and almost three quarters of NHG loans. This emphasises the valuable role brokers play as advisers to their customers.
“We expect brokers will continue to be a key channel for the FHLDS, NHG and the recently launched Family Home Guarantee.”
According to the NHFIC, since 1 January 2020, 22,879 home purchases by almost 33,000 Australians were supported by either the FHLDS or the NHG.
The majority of participants in the schemes were aged under 30 in FY21, representing 58 per cent of all buyers under the schemes.
The top two states supported under the schemes were NSW (11,000 residents) and Queensland (9,000 residents).
The report also found that the FHLDS and NHG schemes supported one in 10 of all first-time home owners during FY21 and helped over 3,700 key workers in FY21, accounting for 23 per cent of all guarantees issued over this period.
As of this financial year, both the FHLDS and Family Home Guarantee operate under new property price caps.
The move comes following criticism that the caps were too low in some cities, particularly given that the average house price in NSW has now surpassed $1 million for the first time.
They are as follows:
The capital city price thresholds apply to regional centres with a population over 250,000, “recognising that dwellings in regional centres can be more expensive than other regional areas”.
Regional centres include Newcastle and Lake Macquarie; Illawarra (Wollongong); Geelong; Gold Coast and Sunshine Coast.
[Related: Government expands FHLDS property price caps]
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