The Albanese government will launch its expanded 5% deposit scheme for all first-home buyers earlier than planned, with the start date now set for Oct. 1.
The scheme allows first home buyers to enter the market with just a 5% deposit, with the government guaranteeing part of the loan so buyers can avoid paying lenders mortgage insurance (LMI).
“We want to help young people and first home buyers achieve the dream of homeownership sooner,” Prime Minister Anthony Albanese (pictured above) said in a government media release.
“Bringing the start date of our 5% deposit scheme forward will do just that. Getting more Australians into their own home quicker, while saving them money along the way.
“Labor was re-elected with a clear mandate to bring down the deposit hurdle for first home buyers, and we’re delivering.”
From October, all first-home buyers will be eligible, with no income caps or limits on places.
Property price caps will also rise in line with average house prices, widening access to more homes.
“Five per cent deposits for all first-home buyers will mean people can get into their own home sooner,” Minister for Housing Clare O’Neil (pictured right) said.
“The Albanese Labor government is stepping up to level the playing field and back a new generation of first-home buyers into the housing market.
“It’s just not right that an entire generation of young Australians have been locked out of the housing market – saving for decades while paying off someone else’s mortgage. So, Labor’s changing it.
“Yesterday we announced reforms to unlock tens of thousands of new homes and today we’re announcing changes to help tens of thousands of first-home buyers get into homeownership.”
The government estimates that in the first year alone, first-home buyers using the scheme will avoid around $1.5 billion in potential LMI costs.
The median home price in Australia is $844,000, meaning a 5% deposit equals $42,200. The government notes that the last time this figure equated to a 20% deposit was in 2002, highlighting the generational scale of the change.
Examples released show the impact:
The government has directed Housing Australia to promote the diversity of lenders in the scheme, increasing opportunities through smaller, customer-owned and regional banks as well as the majors.
Housing Australia confirmed the expanded scheme will be available through more than 30 participating lenders.
“We’ve been proud to support the Home Guarantee Scheme since it began because it makes a real difference to those trying to buy their first home,” said Matt Dawson, NAB executive home ownership, in a media release.
“We back these further measures such as removing barriers like income caps and uncapping the number of places available – making the scheme available to all Australian first-home buyers.
Dawson said many people wrongly assume they need a 20% deposit, but the scheme proves homeownership can happen much sooner. He added the changes come at the right time, with rates easing and buyer activity expected to lift in spring and noted NAB looks forward to rolling them out in the coming months.
Dawson also stressed that supply remains the critical factor in solving affordability.
“It’s important that we continue to see more homes built. Improving supply alongside initiatives like the HGS is key to addressing the housing challenge in Australia,” he said.
Since 2020, NAB has helped more than 46,000 Australians buy their first home through the Home Guarantee Scheme.
FBAA welcomes the changes
Comments from Finance Brokers Association of Australia (FBAA) managing director Peter White reinforced the importance of the government’s expansion.
“This decision will put more younger Australians within reach of realising their homeownership dreams,” White said. “It’s good news for borrowers and good news for brokers, who will be best placed to assist first-time buyers through the process.”
He added that while the scheme is a positive step, more must be done to improve affordability, particularly by unlocking greater housing supply.
The deposit scheme forms part of Labor’s $43 billion housing agenda, which also includes reforms to increase supply and support renters.
Since taking office in 2022, the government says it has already helped more than 180,000 first-home buyers purchase with a lower deposit.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
