First-Home Loan Deposit Scheme almost full four months after it opened: new data

There are few chances left for first-home buyers to snap up an established property with a low 5 per cent deposit while avoiding mortgage insurance, new figures reveal.

Only four months since it opened, there are just 363 places left across the country out of the 10,000 spots released at the beginning of this financial year as part of the federal government’s First-Home Loan Deposit Scheme.

Some 5332 buyers have purchased using the program since July, while 4305 have reserved a place and are looking for a home, Treasury figures show.

Among those who have already bought, the majority were from Sydney (965), Melbourne (823), Brisbane (763) and Perth (373).

It comes at a time when first-home buyers have been keen to get onto the property ladder, with the proportion of first-time buyers at a decade high, accounting for 41.1 per cent of all loans, according to ABS figures.

Mortgage Choice Dee Why broker James Algar said the scheme had all but stopped taking applications due to the sheer demand,

“Compared to January, February [the first 10,000 spots] … the July-August appetite was huge,” Mr Algar said. “Every lender I’ve spoken to has said they’re massively oversubscribed.”

The pandemic produced a counter-effect, drawing more first-home buyers into the market with the perception there were good buying opportunities, Mr Algar said.

“All the major banks have closed their wait list,” he said “There’s no clear line of sight on whether there will be another 10,000 spots in January especially with these latest spots in new builds.”

The government this month announced an additional 10,000 spots in the scheme this financial year on the condition buyers bought newly built homes but those places are yet to be released. And, another 10,000 places were opened in January for financial year 2020.

Even those interested will need to buy newly constructed or near-completion homes, according to Melbourne-based mortgage broker and Pearse Financial director Tom Pearse.

“It needs to be built and ready to go,” Mr Pearse said. “We don’t know if they’re going to have a spot in the scheme in 18 months time or whether the scheme is still in play.”

“It’s really difficult when people call you up with off-the-plan places … it’s being rolled out on a six-monthly basis. We’re learning as we go.”

The majority (35 per cent) of applicants are aged between 25-29 years of age followed by 18 to 24-years-olds, who make up almost a quarter of applicants.

Applicants accessing the schemes put down an average deposit of 6 per cent but many have saved more but opt to save cash for a “rainy day fund” due to the pandemic-induced recession, brokers said.

Ray White Surry Hills director Ercan Ersan said he had seen an increase in first-home buyer activity in the past fortnight.

“I’ve definitely seen and felt just in the last two weeks an increase in numbers just from first-home buyers in terms of inquiries to inspections to contracts to people actually bidding and buying,” he said, adding that buyers were expecting reduced property prices due to the pandemic.

“There more important thing, better than the recession or the virus, is that interest rates are really low at the moment and banks are lending. That’s a driving factor,” he said. “There’s a lot of bank of mum and dad.”

Sixty per cent of scheme applications are individual and 40 per cent are couples.

40Forty Finance director and mortgage broker Will Unkles said first-home buyers are lucky to gain access to the scheme and should aim to get their foot in the door in other ways.

“There’s 110,000 first-home buyers a year and there’s 10,000 spots on this list. You have a one in 11 chance of getting this spot, theoretically,” he said. “To get a spot is fortunate. It shouldn’t be the only way to get a property.”