Via Banking Day:
Demand for guarantees under the Morrison Government’s First Home Loan Deposit Scheme now exceeds capacity after the limit of 10,000 borrower reservations was reached last week.
Data collated by the National Housing Finance and Investment Corporation – the government agency tasked with managing the program – show that 5,500 guarantees have been issued through the scheme.
Another 4500 borrowers have guarantees reserved for residential property purchases in the coming months.
The Covid-19 health crisis and resulting lockdown of economic activity could be one of the drivers of heavy borrower demand for the government guarantees.
The pandemic’s profound impact on the tourism, hospitality, entertainment and fitness industries prompted QBE to impose a temporary embargo on the provision of lender’s mortgage insurance to borrowers employed in these sectors.
QBE’s embargo meant that scores of lenders stopped taking applications from low-deposit first home buyers working in these industries.
The decision forced mortgage brokers to identify other lending options for prospective low-deposit home buyers, including the First Home Loan Deposit Scheme, which is backed by CBA, NAB and 25 other lenders.
First home buyers are eligible to secure a government guarantee even if they only have a 5 per cent deposit on a home loan.
The main benefit of the guarantee is that young borrowers are not required to cover the cost of LMI on their loans.
Let not the banking system not do its work for the unemployed needs mortgages too.