The Home Guarantee Scheme (HGS), which enables buyers to enter the market with a deposit as low as 2%, has proven to be a pathway towards steady equity growth for its participants.
A joint study by the National Housing Finance and Investment Corporation (NHFIC) and CommBank revealed first-home buyers achieved an average equity gain of $82,000 since 2020.
While the average deposit size under the scheme remains relatively unchanged - from $35,200 in 2022 to $36,400 in 2023 - it is significantly lower than the broader first-home buyer market, where average deposits rose by almost 50% to $159,000.
Borrowers utilising the HGS tended to take out smaller loans relative to their income compared with the broader first-home buyer market.
The average loan amount under the HGS has increased 4.7% since 2020, while the average loan for the broader market increased by 13.4%.
NHFIC Head of Research Hugh Hartigan said first-home buyers were showing resilience in the face of challenging conditions.
“Despite the challenging interest rate environment and dwelling price falls last year, it is encouraging that the (average) equity position of Home Guarantee Scheme participants appears to be holding up,” Mr Hartigan said.
“It is also interesting that deposits for first home buyers outside of the HGS have risen so strongly, which may indicate they have other ways of supplementing their savings.”
The analysis also revealed the HGS supported more women as a proportion of single borrowers, surpassing the broader first-home buyer market (54% compared to 47%).
In June, the NHFIC reported 100,000 Australians had taken advantage of the low-deposit scheme since its commencement in 2020.
According to the NHFIC, around a fifth of all those who qualified and used the scheme were key workers including 6,700 teachers, 5,000 nurses, and almost 3,500 social workers.
In the 2023 Federal Budget, the government announced an expansion to the eligibility criteria for the HGS.
From 1 July, friends, siblings, and other family members will be able to jointly apply for the First Home Guarantee and Regional First Home Guarantee.
The Guarantees will also be available to borrowers who are permanent residents, as well as non-first home buyers who haven’t owned a property in Australia in the past 10 years.
Advertisement
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.08% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 Star Customer Ratings |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% | Apply in minutes |
| Promoted | Disclosure | |||||||||
6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure |
Image by Drazen Zigic via freepik
Ready, Set, Buy!
Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!
With bonus Q&A sheet and Crossword!
