Numerous prospective first-home buyers are at risk of missing out on thousands of dollars of savings due to confusion around eligibility for government assistance.
More than 21,000 first-home buyers have used the government’s expanded First Home Guarantee in the last four months, with government estimates showing one in ten properties across the country purchased using the scheme in October alone.
The scheme allows first-home buyers to purchase a home with a deposit of as little as 5%, with the government guaranteeing up to 15% of the property value, bridging the gap to a 20% deposit and removing the requirement for costly Lenders’ Mortgage Insurance.
The October expansion scrapped caps on the number of places in the scheme, removed income caps and updated property price thresholds to more closely align with median property prices nationwide.
The latest Mortgage Choice Home Loan Report, which draws on home loan submission data and a national survey of 1,000 consumers, found 28% of prospective first-time buyers said the scheme’s expansion prompted them to buy sooner.
Despite this, confusion around eligibility for the scheme since the October changes means it may have hampered significantly more first-home buyers than it has helped.
“A quarter of prospective buyers say they don’t know if they are eligible,” Mortgage Choice chief executive Anthony Waldron said.
“These highlight just how important it is to get expert advice from a mortgage broker, especially if you’re navigating the property market for the first time.”
Mortgage Choice chief executive Anthony Waldron
To utilize the scheme, prospective buyers must meet a range of eligibility criteria covering everything from age and nationality to property price caps and intention of how they will use the property.
Unlike other similar leg-ups from the government in the past, people in any tax bracket are able to use the scheme thanks to the removal of income restrictions, one of the common misconceptions around eligibility.
While many are missing out, Mr Waldron said the impact of the scheme in the market since October “is undeniable”.
“For most first-home buyers, these shifting goal posts mean the scheme may be the helping hand they need to fast-track their entry into the market.
“Seeing the average loan size rise by over $80,000 in markets that have been historically more accessible, like South Australia and the Northern Territory shows just how challenging the market has become for first-home buyers.”
Data from the Australian Bureau of Statistics this week shows strong first-home buyer activity led a ramp up in lending activity across all borrower-types between October and December.
A total of 31,780 loans were issued to first-home buyers in the quarter, with the total value of borrowing up 15.5% compared with 2023.
This article first appeared on Mortgage Choice and has been republished with permission.
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