Demand for the first home deposit scheme has been particularly high with major banks, NAB and Commonwealth Bank already filling their allocated quota of applicants. This means that for a first home buyer to successfully access the scheme in coming months, that they will have to file an application through one of the 25 smaller housing lenders in the market.
These smaller banks initially had a combined total of 10000 places available and places are said to be filling up fast. A Bendigo Bank spokesman indicated that the bank had already taken hundreds of applications since making their allocation available at the start of February.
Competition for places is set to increase as the scheme can save first home buyers thousands of dollars in lenders mortgage insurance.
Lenders Mortgage Insurance (LMI) is usually a condition of loan approval placed upon borrowings in excess of 80% of the value of the property being purchased. Premiums are either added to the total loan amount (and accrue interest) or are charged separately at settlement. Usually,a property costing $550,000 with a loan of $510, 000 would incur LMI of approximately $21,828 – so there is plenty of incentive for first home buyers to get in quickly and get access to the scheme.
Initial statistics supplied by the National Housing Finance Investment Corporation paint a picture that shows first home buyers entering enthusiastically into the market.
- Approximately one third of first home deposit scheme grant applicants are aged between 25 and 29 while another third is aged between 30 and 39.
- The average income for singles claiming places was $67698 – way below the threshold of $125000
- The average income for couples claiming places was $110,988 – again way lower than the threshold of $200,000
- The biggest take up of First Home Owners Deposit scheme places has come from Sydney where the average purchase price has been $574000 or 82% of the maximum price allowed under the scheme
- Take up levels in Melbourne and Brisbane have also been quite high with average purchase prices being a little lower.
With places at a premium, if you are considering entering the housing market for the first time, now is the time to explore your options and prepare to make a move. A good first step would be to contact us at Australian Finance Hub for a consultation on your needs and the possibilities available to you. We are here to help – give us a call today.