Westpac dumped from First Home Loan Deposit Scheme

author-avatar By on November 28,2019
Westpac dumped from First Home Loan Deposit Scheme

Photo by Aaron Barnaby on Unsplash

In what is turning out to be a very bad week for the bank, Westpac has allegedly been axed as the second major lender for the governments’ First Home Loan Deposit Scheme over reputational risk concerns.

News Corp reports Westpac insiders told The Australian the bank had expected to be approved as the second major lender for the scheme, but understood it would now be excluded in the wake of money laundering allegations against it.

On Tuesday, NAB got the green light from the National Housing Finance and Investment Corporation (NHFIC) to support the scheme.

The Australian understands Westpac’s bid was one of the two best applications reviewed by the NHFIC under strict evaluation criteria, one of which included “the reputation of the respondent”.

According to NHFIC’s request for proposal, lenders were asked to provide details of “any regulatory matter (in the last five years), or any other matter that has had or may have a material adverse effect on the reputation of your organisation. This includes any claims, litigation or threatened litigation and any investigation or adverse findings”.

Westpac has been accused of 23 million money-laundering breaches by watchdog AUSTRAC, some of which may have funded child exploitation in Southeast Asia.

Looking for a low-rate variable home loan? The table below displays a selection of variable-rate home loans on offer, featuring a low-rate pick from each of the following three categories: the big four banks, the top 10 customer-owned banks, and the larger non-banks.

Provider Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan 2.88% 2.90% $1,660 More details
Discount Variable 80% 3.07% 3.09% $1,702 More details
Base Variable Rate Special P&I 3.20% 3.20% $1,730 More details
Ad rate
Comp rate*
Purchase or Refi, P&I 80% Smart Home Loan
2.88% 2.90% $1,660
More details
Discount Variable 80%
3.07% 3.09% $1,702
More details
Base Variable Rate Special P&I
3.20% 3.20% $1,730
More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 1 November 2019. View disclaimer.

Westpac’s chief executive officer Brian Hartzer will step down on December 2 in the wake of the scandal.

The government is expected to now choose between either Commonwealth Bank or ANZ to participate in the scheme, with a decision on the second major bank and approved non-major bank lenders expected to be made by the end of the year before the scheme kicks off on January 1 2020.

The big banks could only be entitled to receive up to half of the 10,000 guarantees allocated each financial year, while a range of non-major lenders will receive the other half.

Housing Minister Michael Sukkar said this is to keep the home loan space competitive.

“These rules are designed to ensure the Government’s expectation that smaller lenders play a significant role in the First Home Loan Deposit Scheme to boost competition is met,” Mr Sukkar said.

The scheme, one of Prime Minister Scott Morrison’s key pledges at the May 18 election, allows some first home buyers to secure a home loan with a 5% deposit and not have to pay for lenders mortgage insurance (LMI). The NHFIC would then guarantee the rest of what would normally be a 20% deposit.

Applicants will be subject to an income threshold of up to $125,000 for singles and a combined income of $200,000, provided both individuals are first home buyers.

Property price caps will also apply under the scheme to reflect the median house prices and stamp duty concessions in each of the states and territories.

Savings.com.au has reached out to Westpac and NHFIC for comment.


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 2019. 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 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

In the interests of full disclosure, Savings.com.au 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 includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

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Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand.


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