Commonwealth Bank has passed a lending milestone, with 1,000 prospective first home buyers purchasing a home with them via the Australian Government's First Home Loan Deposit Scheme.
The First Home Loan Deposit Scheme (FHLDS), launched by the government on January 1 2020, can help eligible first home buyers secure a home loan with a deposit as little as 5% by guaranteeing up to 15% the value of the home, meaning they don’t have to pay the oft-dreaded Lenders Mortgage Insurance (LMI).
The scheme is limited to 10,000 loans per year, from a total of 27 lenders.
According to Commonwealth Bank, 1,000 of those spots - aka one-tenth - have been filled by its customers, with another 2,400 securing a spot for future purchases.
According to CBA, those 2,400 customers who’ve reserved a spot under the scheme can now have an extra 90 days to extend the deadline to find a property and enter a contract of sale, giving them six months in total.
“There is a lot of interest and uncertainty about the impact the coronavirus will have on the Australian property market so it’s encouraging that we have crossed this exciting milestone in the current environment,” CBA Group Executive Retail Banking Services Angus Sullivan said.
“Whether you are purchasing your first home or looking to buy a new home we want to reassure customers that we are open for business and here to help them realise their home ownership goals.
“We also realise that some customers are looking for support during this difficult period and we have a range of measures to assist them including deferring repayments and reducing repayments to free up cash.”
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
According to the latest figures released by Federal Minister for Housing Michael Sukkar, 4,147 spots in total have been filled in the FHLDS among the 27 lenders, and a further 1,944 are on hold waiting for the purchase of a property.
That leaves only 1,944 spots still available, potentially even less as some are still being processed.
Among the different states:
- 1,397 certificates have been issued in NSW
- 1,119 have been issued in Queensland
- 951 have been issued in Victoria
House prices could fall by 30%
First home buyers looking to access the scheme might be considering waiting a little while before jumping into the property market, as property prices are expected to plunge, primarily thanks to COVID-19.
NAB research outlines two scenarios that would affect the amount of defaults across its loan products.
The first is a “severe downside scenario” with a U-shaped recovery in the economy, which would see house prices fall 20.9% in 2020, 11.8% in 2021 and marginally rebound by 2.5% in 2022.
The softer, “V-shaped recovery scenario” would see house prices fall by 10% in 2020 and rebound by 2.6% in 2021.
This data is supported by a similar study by Data house SQM Research, which said a 30% decline in dwelling prices by the end of 2020 is “entirely possible” in a worst-case scenario.
Prospective first home buyers can submit applications directly through the participating lender of their choice.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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