The First Home Loan Deposit Scheme is now full, despite COVID-19 crisis

First-home buyers eager to get a toehold in the property market have snapped up all the places being offered by the federal government’s First Home Loan Deposit Scheme before the June 30 deadline – despite the COVID-19 pandemic.

The scheme, which allows first-timers to buy a property with as little as a 5 per cent deposit and not have to take out expensive mortgage insurance, has proved most popular with people under 30, who have taken up 58 per cent of the guarantees.

Another 12 per cent have gone to those over 40, according to data from the National Housing Finance and Investment Corporation, showing it’s also proved a hit with older Australians who’ve never before bought property.

While the scheme is capped to singles on incomes up to $125,000, or couples up to $200,000, the average income of those applying is just over half that.

Minister for Housing and Assistant Treasurer Michael Sukkar said the scheme, a key Morrison government election promise, had had an incredibly successful first year.

“First-home buyers have shown great confidence in the scheme and the housing market, reserving the remaining guarantees available – totalling 10,000 – before the 30 June deadline,” he said.

“The scheme is cutting years off the time it takes first-home buyers secure a deposit and, as expected, the data shows applications for guaranteed loans are being received from all parts of our community, be it in our capital cities, regional centres or rural areas.”

A further 10,000 guarantees will now become available to first-home buyers from July 1 and Mr Sukkar expects they would be in similarly high demand.

Agents around the country report that the scheme has kept the demand for properties from first-home buyers steady, despite the general slowing of the market from the pandemic.

“Throughout COVID-19, our biggest spike in inquiry was for properties below the upper limit for the scheme, under $600,000,” said Jesse Jones of McGrath St Kilda. “A lot of buyers were talking about the scheme and how it was helping them get into the property market.

“I think along with low interest rates, and probably parents who are encouraging them to get into the market, having known interest rates of 15 per cent in the past, it’s really been promoting confidence.”

The upper threshold for properties to be bought with the guarantees are $600,000 in metropolitan Victoria and $700,000 in metropolitan NSW. In regional Victoria, it’s $375,000 and regional NSW $450,000, while Brisbane is capped at $475,000, Canberra at $500,000 and Perth at $400,000.

In Sydney, it’s been proving similarly popular. David Diamantopoulos of Devine Real Estate Marrickville said first-home buyer activity has proved pretty constant. “We’re seeing a lot of first-home buyers out and about, especially now we’re back to open inspections,” he said.

“Mostly we’re seeing them at anything under $700,000 and a lot are mentioning the First Home Loan Deposit Scheme and asking us to mention to vendors that they’re getting finance on that. They’re hoping that, for properties just over the limit, it’ll persuade vendors to bring the price down to just under it. That doesn’t usually work as there’s such a shortage of supply at the moment.”

The scheme was introduced in January this year to give first-home buyers a helping hand into the market. It’s guaranteed a total of more than $316 million in home loans so far.

First-timers from NSW have taken 3114 of the guarantees, while Victorians are the second-keenest with 2306 successful applications. Over half of the guarantees issued have now been actioned.

The government estimates the scheme cuts as much as $10,000 off the average home loan.