NAB to implement First Home Loan Deposit Scheme

author-avatar By on November 26,2019
NAB to implement First Home Loan Deposit Scheme

Image source: NAB Twitter

NAB has been announced as the first of two major lenders to offer mortgages under the Federal Government’s First Home Loan Deposit Scheme.

The scheme, which was first announced in May, will allow eligible first home buyers to enter the market with a deposit as low as 5% under a special government guarantee.

NAB was selected by the National Housing Finance and Investment Corporation (NHFIC) to take part in the scheme, who said it had received a “strong response” from other lenders.

According to NAB, the bank will get access to up to half of the 10,000 eligible first home buyers per financial year, and say they “will not charge eligible customers higher interest rates than equivalent customers outside of the Scheme”.

Former NSW Premier, now NAB Chief Customer Officer – Consumer Banking, Mike Baird said the scheme could save borrowers thousands.

“We are proud to be chosen to partner with the Federal Government and NHFIC on the First Home Loan Deposit Scheme,” Mr Baird said.

“Every year our bankers help more than 15,000 Australians achieve their dream of owning their first home. This Scheme is a fantastic way of helping even more customers, allowing them to potentially save thousands of dollars on their mortgage.”

Since March 2017, NAB has been the only major bank to have a special rate for first home buyers, with the rate currently at 2.88% p.a. (4.34% p.a. comp rate*) fixed for two years.

NAB will be part of a panel of lenders, including one other major bank and smaller lenders, said to be finalised by mid-next month.

The NHFIC said lenders on the panel will be chosen “based on the competitiveness of their home loan offering, geographic reach, and readiness to meet Scheme implementation timelines”.

Housing Minister Michael Sukkar previously said only two of the big four banks will be chosen to take part in the Scheme, with 50% of guarantees to be issued to smaller lenders.

“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 will be operational from 1 January 2020 on a first in, best-dressed basis for up to 10,000 eligible first home buyers each year.

Applicants will be subject to an income threshold of up to $125,000 for singles, and a combined income of $200,000 for couples if it’s their first home loan and they are both first home buyers.

Property price caps will also apply under the Scheme, with properties in Sydney limited to $700,000, and $600,000 in Melbourne.

Once the Scheme kicks off, applications will be lodged directly through participating lenders and their brokers.

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
p.a.
Comp rate*
p.a.
Monthly
repayments
 
2.63% 2.65% $1,607 More details
2.78% 2.84% $1,639 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%. The product and rate must be clearly published on the Product Provider’s web site. 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 26 March 2020. View disclaimer.


Disclaimers

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.

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 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.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Emma joined Savings.com.au as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).

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