According to Zippy Financial, although applications for the federal government’s First Home Loan Deposit scheme (FHLDS), will open in two weeks many first-homebuyers are still unsure about its implementation.

Louisa Sanghera of Zippy Financial stated that the FHLDS implementation seems to have been “rushed into existence”.

It seems that the policy was not adequately considered and drafted on time. She said that first-home buyers are still in the dark about how the scheme works, with just two weeks to go before it launches.

First home buyers that cannot meet the lender’s 20% down payment requirement will be able to apply for a loan using as little as 5% under the First Home Loan deposit Scheme. The government will be the guarantor for their home loans. They will not be subject to mortgage insurance (LMI) from lenders.

The National Housing Finance and Investment Corporation has begun to provide details about the scheme in recent months. They began by limiting the prices of properties that are eligible for this program.

NHFIC launched an online tool that allows first-home buyers to calculate the property price threshold for their area in November. Also, a tool for eligibility was released.

Last month, the NHFIC announced that the National Australia Bank was one of two majors selected to join the scheme’s lender panel. The Commonwealth Bank of Australia, 25 non major lending institutions, as well as the Commonwealth Bank of Australia joined the panel last week.

NHFIC stated the panel composition is a demonstration of the government’s efforts encourage competition between small and large lenders, and ensure that the scheme has wide geographic coverage.

NHFIC stated in an announcement that the panel’s composition will allow for strong activation of mortgage broker channels and encourage first home buyers.

Sanghera believes that the reverse is true. Sanghera believes NHFIC is reducing competition by limiting the scheme’s reach to 27 banks. This could result in higher interest rates for buyers who are most likely to have difficulty affording housing.

She claimed that the selection of lenders wasn’t transparent, as she couldn’t find any information on which banks applied for this program and why.

The scheme only has 27 lenders. This is due to the fact that there are very few guarantees for the year. During the first year of the scheme’s implementation, it will only accommodate 10,000 first-home buyers. 

FHLDS applicants will not be charged higher interest rates by the panel of lenders that were selected. They will receive the same rate as regular customers.

Sanghera said that not all lenders are available to the panels of mortgage brokers, despite them writing approximately 65% mortgages in Australia.

“So, we don’t have access. What’s the point in restricting bank access if it’s a positive outcome to every Australian looking to enter the housing markets? “How has ASIC approved the scheme?” She stated.

NAB recently launched a portal for this scheme. It allows interested parties to register their expressions-of-interest for the scheme by providing complete contact information and their names.

We will use your information to assist you with your inquiry. According to the NAB website, we can use your application if you submit a loan request.

According to the bank this will serve as a waiting list. Due to the limited number of slots, not all applicants will get accepted.

CBA and NAB begin accepting applications in January. The next month will see applications from other lenders.