Weekly finance update - Home Guarantee Scheme - Mortgage Domayne

Weekly finance update – Home Guarantee Scheme

May 6, 2023

Welcome to the finance update for the week ending 6 May, 2023.

Clearly a lot can change in the course of a week – only last week all the indicators were suggesting the RBA’s run of rises had come to an end, but alas we now know they were not done with us.

On a brighter not, we were delighted to be advised this week that we had made Mortgage Professionals Australia Magazine’s Top Brokerage list for 2023, coming in at a very pleasing number 15. This is an achievement that wouldn’t have been possible without thew continued support of our wonderful referral partners.

In this week’s newsletter, we explain some of the recently announced changes to the Government’s Home Guarantee Scheme.

If you or your clients would like more specific information or advice about the application of the scheme, don’t hesitate to reach out to us.

More people will be able to access the Home Guarantee Scheme in the new financial year, as the government announces a swathe of eligibility criteria changes.

Eligibility criteria for all elements of the scheme — including the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee — will be expanded as the government continues to address Australia’s housing challenges.

Among the main changes are outlined below –

Permanent residents to be eligible

While the three guarantees — the First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee — are currently limited to Australian citizens, all three guarantees will also become available to eligible borrowers who are Australian permanent residents from 1 July 2023.

Joint applicant eligibility expanded

From 1 July 2023, friends, siblings, and other family members will also become eligible for joint applications under the First Home Guarantee and the Regional First Home Buyer Guarantee.

Previously, these guarantees were only available to couples (those who are married or in a de facto relationship) or single applicants. However, the criteria for the First Home Guarantee and Regional First Home Buyer Guarantee will be expanded from the new financial year to enable couples who are not in a relationship — such as friends and family members — to join the scheme.

Single legal guardian expansion for Family Home Guarantee

The scheme currently supports eligible single parents with at least one dependent child to buy a home with as little as 2 per cent deposit without paying lenders mortgage insurance. The government guarantees a maximum amount of 18 per cent of the value of the property (as assessed by the participating lender).

From 1 July, the government will expand the eligibility criteria from single natural or adoptive parents with dependents to eligible borrowers who are single legal guardians of children such as aunts, uncles, and grandparents.

Previous home owners to be given access

The final change involves tweaking the guarantees to allow previous property owners to enter the scheme.

While the Home Guarantee Schemes are currently only available to first home buyers, the new financial year will enable former property owners to enter the scheme. However, this will be limited to those who haven’t owned a property in Australia in the last 10 years.

The change aims to support those who have “fallen out of home ownership”, for example, those who may have experienced financial crisis or relationship breakdown.

Any changes in interest rates from last week are highlighted in orange.

Note – Increases announced by lenders as a result of RBA decisions normally take 1-2 weeks to come into affect.

Standard Variable

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.

1 Year Fixed

The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.