The Customer Owned Banking Association (COBA) has welcomed the LNP’s 5% deposit scheme, which is set to give preference to smaller banks.
Prime Minister Scott Morrison announced at the Coalition’s campaign launch that the LNP, if re-elected, would guarantee the additional amount needed to reach the 20% deposit threshold for first home buyers, down to a deposit of 5%.
Labor was quick to copy/paste the LNP’s promise – vowing to match it if they are elected come the weekend.
COBA CEO Michael Lawrence welcomed both the LNP’s and the Labor Opposition’s announcements.
“Australia’s credit unions, mutual banks and building societies have provided loans for millions of Australians buying their first home,” Mr Lawrence said.
“By preferencing smaller banks, the Prime Minister is acknowledging that Australians should look beyond the Big Four.”
How exactly the First Home Loan Deposit Scheme, to start on 1 January next year, will prioritise smaller and customer owned institutions isn’t yet clear.
The only reference to such organisations in the Liberal Party’s official statement is the following:
“The National Housing Finance and Investment Corporation will partner with private lenders to deliver the First Home Loan Deposit Scheme, prioritising smaller lenders to boost competition.”– Scott Morrison
Scott Morrison also said the government guarantee would only be available for the first 10,000 annual users on a “first come, first served” basis – that’s about one-tenth of the number of annual first home buyers nationwide.
“The scheme will ultimately be determined by the number of loans approved by the lenders and the arrangements with the National Housing Finance and Investment Corporation,” Mr Morrison said.
More details will likely be made public in the aftermath of May 18th’s federal election.
Regardless, Mr Lawrence said COBA “looks forward to working on the details of the scheme with whichever party wins government on Saturday.”
“The First Home Loan Deposit Scheme announced by Prime Minister Morrison, will make it easier for many Australians to get into the property market sooner,” he said.
Customer-owned institutions account for 70% of all authorised deposit-taking institutions in the Australian market, but the majority of the home loan market remains concentrated in the big four.
Although not always the case, there are many smaller lenders who offer more competitive rates and fees than the likes of Commonwealth Bank, ANZ, Westpac and NAB.
The Customer Owned Banking Association itself represents well-known lenders like Bank Australia, CUA, Heritage Bank and more.