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Thousands of regional Australians gained access to the guarantee scheme over the weekend.
The Regional First Home Buyer Guarantee (RFHBG) program — a pre-election promise — opened on Saturday (1 October), offering 10,000 places to regional first home buyers.
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The scheme guarantees up to 15 per cent for eligible first home buyers, so regional Australians with a 5 per cent deposit “can avoid paying mortgage insurance,” the government explained.
It also omits the requirement to pay lenders mortgage insurance (LMI) and have arrived three months earlier than expected.
Major banks, including the Commonwealth Bank (CBA) and the National Australia Bank (NAB), as well as the Finance Brokers Association of Australia (FBAA) have applauded the scheme at a time when interest rates are on the rise and cost of living pinches regional Australians.
FBAA’s managing director Peter White welcomed the scheme, but had a close eye on the impacts of the rising cash rate on Australian borrowers.
“I just hope rising interest rates and the subsequent leveraging of the ‘stress rate’ on top of the rate they will pay doesn’t knock people out of the market who may have been able to otherwise take advantage of this,” Mr White said.
“There are variations on what the stress test margin/rate is and all lenders should apply no more than what is regulated.”
Indeed, regional brokers will be of benefit to Australian borrowers to support the scheme and home ownership, he said.
“Brokers in these marketplaces where this will apply will of course be able to beneficially assist customers who fit into this category,” Mr White said.
“Experiences to date in this area of Gov Assistance show that brokers are a significant part of ensuring people get access to this.”
Eligibility for the scheme will be based on applicants being Australian citizens, they must purchase outside a capital city, and they must demonstrate they have been living in the region in which they are purchasing the property (or adjacent regional area) for at least 12 months.
According to the government, property price caps and income caps will be consistent with the existing First Home Guarantee, administered by the National Housing Finance and Investment Corporation (NHFIC).
Commonwealth Bank’s executive general manager, home buying, Dr Michael Baumann, said the announcement will come as a “welcome relief to those regional first home buyers” who want to get their foot on the property ladder.
“We want to support buyers right across the country, and the new Regional First Home Buyer Guarantee is another way we can help Australians navigate the current environment to secure their first home and invest in their future,” Dr Baumann said.
To further help Australians manage the ongoing cost-of-living pressures, Dr Baumann said the bank was providing customers with exclusive offers through its strategic partners — with More Telecom.
CBA is offering conditionally pre-approved home loan customers who settle a home loan of at least $250,000 with CBA by the end of the year a free nbn plan for three years. The 36-month nbn plan could save eligible home owners over $2,700.
The National Australian Bank (NAB), which has helped more than 15,000 first home buyers through the Home Guarantee Scheme, including 4,000 first home buyers in regional locations, added it was “looking forward to helping even more Australians to buy their very own home” following the launch.
“We expect strong demand for places in the Regional First Home Buyer Guarantee,” NAB executive home ownership Andy Kerr said.
“Regional Australian locations definitely became popular at the start of the pandemic with people moving for a ‘green change’ and this scheme will be pivotal in making the move a permanent one for many.
“We know that affordability has been a concern for many first home buyers. This scheme will be critical to providing more opportunities for buyers to enter the market in regional townships.”
[Related: Regional home guarantees set to make a ‘real difference’]
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